Attorney General Phil Weiser announces $1.85 billion national settlement with student loan servicer Navient
More than 1,000 Coloradans to have their debt forgiven, nearly 7,000 eligible for restitution
Jan. 13, 2022 (DENVER)—Attorney General Phil Weiser today announced that Navient, one of the nation’s largest student loan servicers, will provide debt relief to 1,339 Colorado student loan borrowers totaling more than $35 million, and pay $260 each in restitution to 6,844 Colorado borrowers after widespread unfair, deceptive, and predatory student loan servicing practices.
The nationwide, $1.85 billion settlement, joined by a coalition of 39 attorneys general, resolves claims that Navient steered struggling student loan borrowers into costly long-term forbearances instead of counseling them about the benefits of more affordable income-driven repayment plans. Attorney General Weiser filed the settlement as a proposed consent judgment today in Denver District Court. It will require court approval.
“Many of our young people, and those who wish to further their education later in life, are faced with daunting financial decisions that can have decades-long ramifications,” Weiser said. “Student loan servicers like Navient have an ethical and legal responsibility to inform borrowers of the best repayment options available to them, and to support them as they work to pay back their loans. When they fail to do so, they need to be held accountable. Today’s settlement will do just that and provide many students with the relief they deserve.”
According to the attorneys general, the interest that accrued because Navient steered borrowers toward forbearance was added to the borrowers’ loan balances, pushing borrowers further in debt. Navient also allegedly issued subprime loans, which are high-interest private loans given to those who would not qualify for other loans, to students attending for-profit schools and colleges with low graduation rates, even though it knew that a very high percentage of such borrowers would be unable to repay the loans. In so doing, Navient acted without regard for borrowers and their families, many of whom were unknowingly ensnared in debts they could never repay.
The settlement, in addition to restitution and forgiveness requirements, requires Navient to cease its deceptive practices and notify borrowers about the U.S. Department of Education’s recently announced PSLF limited waiver opportunity, which temporarily offers millions of qualifying public service workers the chance to have previously nonqualifying repayment periods counted toward loan forgiveness. Colorado led the investigation into Navient’s misconduct concerning the PSLF program and championed the inclusion of these requirements in the settlement.
Students eligible for relief will receive a notice from Navient, along with refunds of any payments made on the canceled private loans after June 30, 2021. Federal loan borrowers who are eligible for a restitution payment will receive a postcard in the mail from the settlement administrator later this spring. Colorado student loan borrowers do not need to take other action, except to update or create their studentaid.gov account to ensure the U.S. Department of Education has their current address. For more information about the settlement, visit www.NavientAGSettlement.com.
Navient will also pay $650,000 to the state of Colorado to support future consumer protection efforts, including those targeted at supporting student borrowers and promoting financial literacy.
A Colorado student loan ombudsperson is available as a resource for student loan borrowers throughout the state. Borrowers struggling with their student loans can click here for more information or to file a complaint with the student loan ombudsperson.
Today’s settlement was led by Weiser and the attorneys general of Pennsylvania, Washington, Illinois, Massachusetts, and California. They are joined by the attorneys general from Arizona, Arkansas, 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.
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