Student loan giant Navient will cancel balances on some 66,000 borrowers as part of a $1.85 billion settlement with 40 US states over allegations of predatory lending practices.
State prosecutors said the agreement corrects past ills in which the lending company allegedly steered borrowers into excessively costly repayment options.
Navient said the claims of such conduct were “baseless” but that it agreed to the settlement to avoid a costly legal fight.
The affected loans were originated between 2002 and 2010 and later defaulted or charged off, Navient said. The company canceled a total of $1.7 billion in defaulted loans, according to a three-page Navient handout on the settlement.
Navient also agreed to a one-time payment of $145 million to states. Around $95 million of that sum will go to a consumer fund administered by a manager selected by the state of Pennsylvania.
“Navient repeatedly and deliberately put profits ahead of its borrowers,” said Pennsylvania Attorney General Josh Shapiro.
“Today’s settlement corrects Navient’s past behavior, provides much needed relief to Pennsylvania borrowers, and puts in place safeguards to ensure this company never preys on student loan borrowers again.”
Navient said the settlement “allows us to avoid the additional burden, expense, time and distraction to prevail in court,” said Navient Chief Legal Officer Mark Heleen.
The agreement does not affect ongoing litigation involving similar claims against Navient alleged by the Consumer Financial Protection Bureau. Navient said a trial in that cases “appears unlikely in 2022.” — Agence France-Presse