(WSYR-TV) — New York Attorney General Letitia James announced on Thursday that a bipartisan coalition of 39 attorneys general negotiated a multi-state agreement that cancels $1.7 billion in private student loan debt and recovers $95 million in restitution.
A multi-state investigation found that Navient, since 2009, had steered student loan borrowers into costly and long-term forbearances instead of informing them about other repayment plans that would be more affordable.
The investigation also found that Navient provided predatory, subprime, private loans to students who were attending for-profit colleges with low graduation rates, despite knowing that many borrowers would not be able to repay the loans. Navient also used these loans as “an inducement to get schools to use Navient as a preferred lender.”
For too long, Navient contributed to the national student debt crisis by deceptively trapping thousands of students into more debt. Today’s billion-dollar agreement will bring relief to thousands of borrowers in New York and across the nation and help them get back on their feet. Navient will no longer be able to line its pockets at the expense of students who are trying to earn a college degree. Student loan servicers that operate through deception and wrongdoing will not be tolerated and will be held accountable by my office.Attorney General Letitia James
Under the terms of Thursday’s agreement, Navient will cancel $1.7 billion in subprime, private student loan balances owed by 66,000 borrowers across the country. Additionally, $95 million in restitution payments of around $260 will be distributed to 350,000 federal loan borrowers who were placed in certain long-term forbearances.
New York specifically will receive around $6.8 million in these payments for around 25,000 federal loan borrowers. 4,300 New Yorkers will receive $110 million in in private loan debt cancellation, and almost $1.2 million in cash.
The agreement also requires Navient to notify borrowers of the U.S. Department of Education’s new Public Service Loan Forgiveness program’s limited waiver opportunity.
Borrowers will also be notified by Navient if they receive any debt cancellation. You can also learn more about the settlement on Navient’s website.