$67M In 'Predatory' Navient Student Loan Debt Canceled In PA: AG

PENNSYLVANIA — In what authorities are calling a landmark legal settlement, the student loan company Navient has been ordered to pay back more than $1.7 billion in debt cancelation nationwide for "abusive" practices, including $67 million in Pennsylvania. The company also owes $95 million in restitution nationally and $3.5 million in the Keystone State.

Navient engaged in deceptive forbearance practices which caused students to accrue massive interest, pushing borrowers, many of whom were struggling to barely get by, even further in debt, authorities said.

“Navient repeatedly and deliberately put profits ahead of its borrowers," Attorney General Josh Shapiro said in part of a statement issued Thursday. "It engaged in deceptive and abusive practices, targeted students who it knew would struggle to pay loans back, and placed an unfair burden on people trying to improve their lives through education."

The remaining balance on student debt will be canceled for nearly 66,000 borrowers across the country, according to the settlement. Meanwhile, restitution payments of $260 each will be sent to about 350,000 federal loan borrowers who were qualified for certain types of long-term forbearances.

If you will have your loans canceled, you will receive a notice from Navient by July 2022, authorities said. Refunds on any payments of the canceled loans made after June 30, 2021 will also be refunded. No action is required from loan borrowers to receive these funds.

Those who are eligible for the $260 restitution repayment will receive a postcard in the mail at some point this spring. The only action required by borrowers is to create or update their studentaid.gov account to ensure that the U.S. Department of Education has a current address.

Borrowers who will benefit from this suit include individuals from "all generations," Shapiro's office said, noting that "Navient’s harmful conduct impacted everyone from students who enrolled in colleges and universities immediately after high school to mid-career students who dropped out after enrolling in a for-profit school in the early to mid-2000s."

In Pennsylvania specifically, some 13,000 borrowers will receive $3.5 million in restitution payments and another 2,467 individuals will see some $67 million in debt cancellation.

Shapiro, along with 38 other attorneys general around the nation, said that if Navient had provided the basic assistance it had promised, income-based repayment plans could have greatly reduced monthly payments. The company also could have helped borrowers attain loan forgiveness after 20 to 25 years of payments — or 10 years, if that student qualified under the Public Service Loan Forgiveness Program.

Shapiro co-led the lawsuit against Navient, along with attorneys general in Washington, Illinois, Massachusetts, and California. The suit was originally filed in Oct. 2017. The ensuing four years of litigation saw Shapiro and other attorneys general defeat a motion to dismiss filed by Navient. Officials used the Privacy Act, the Higher Education Act, and the Consumer Financial Protection Act to help win the case.

Other states that joined on to the settlement were Arizona, Arkansas, Colorado, Connecticut, the District of Columbia, Delaware, Florida, Georgia, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia and Wisconsin.