TAMPA, Fla. (WFLA) – Student loan processor Navient, which will soon abandon its handling of federal loans to Maximus, will have to cancel $ 1.7 billion in student loans and pay states whose attorneys general have sued them for an amount collective of 145 million dollars.
The big question for borrowers: will their student loans be canceled?
Navient reached a settlement agreement with 39 states to write off student loan debt for students with private loans after being accused of predatory lending practices and granting loans to students who would not be able to afford them. to reimburse.
Following the settlement, Navient issued a brief statement regarding the claims that led to the lawsuits, announcing that they would write off loan balances for thousands of borrowers. Despite the settlement, the company maintains that the claims were unfounded and that the settlement is intended to avoid additional expenditure of time and money in legal actions.
“Navient will write off loan balances of approximately 66,000 borrowers with certain qualifying private education loans which were created largely between 2002 and 2010 and which subsequently defaulted and were written off,” a statement said in part. from Navient. “Navient will notify affected borrowers and co-borrowers shortly after the agreements have received final court approvals.”
In addition, Navient will pay a one-time payment of $ 145 million to the 39 states that have filed a lawsuit, part of which is to reimburse legal costs for the states and the remainder to be paid as payments to former borrowers.
There have been six lawsuits against Navient, with 39 states signed. The loans, being private, are different from the more familiar student loans received through the system administered by the US government, the Free Application for Federal Student Aid. Unlike FAFSA loans, Navient’s private loans were not backed by the federal government.
So who is eligible for the student loan forgiveness?
Students likely to benefit from this settlement had to take out loans to attend for-profit colleges such as the ITT Technical Institute (permanently closed in 2016 after declaring bankruptcy) and the Art Institute (some campuses are still in operation. activity).
According to Navient, the states whose borrowers could claim relief are Arizona, California, Colorado, Connecticut, District of Columbia, Delaware, Florida, Georgia, Hawaii, Iowa, Illinois , Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Maine, Minnesota. , Missouri, North Carolina, Nebraska, New Jersey, New Mexico, New York, Nevada, Ohio, Oregon, Pennsylvania, Tennessee, Virginia, Washington and Wisconsin.
“Federal loan-eligible borrowers who resided in any of the following states or had an address with a military zip code in January 2017 will receive a check in the amount of approximately $ 260,” Navient said. Separately, the company told WFLA that Florida has more than 7,000 borrowers who will be included in the 66,000 whose loans will be canceled.
“In the loan cancellation population of 66,000, Florida has approximately 7,600 borrowers,” a spokesperson for Navient told the WFLA. “These are borrowers who took out private student loans from Sallie Mae, largely between 2002 and 2010 and then defaulted.”
The settlement agreement comes shortly before Navient leaves the federal student loan management company, the loans she currently serves will be transferred to Maximus, another loan manager.
Navient will contact borrowers who will benefit from a loan cancellation after approval of the settlement agreement by the Federal Court. Borrowers eligible for a settlement payment will receive a postcard in the mail in the spring, according to Navient.