Navient Press Release

January 13, 2022
FOR IMMEDIATE RELEASE

Contact: Nicole Sacre, [email protected]
Attorney General Aaron M. Frey Announces $1.85 Billion Settlement

with Student Loan Servicer Navient
Settlement includes $1.7 billion in debt cancellation and $95 million in restitution; Maine
borrowers will receive over $4,896,415 million in relief
Attorney General Aaron M. Frey filed a Complaint and Consent Judgment today in Kennebec
County Superior Court resolving alleged unfair and deceptive practices in connection with
Navient’s student loan serving business. The settlement will require court approval.
According to the attorneys general, the interest that accrued because of Navient’s forbearance
steering practices was added to the borrowers’ loan balances, pushing borrowers further in debt.
Had the company instead provided borrowers with the help it promised, income-driven
repayment plans could have potentially reduced payments to as low as $0 per month, provided
interest subsidies, and/or helped attain forgiveness of any remaining balance after 20-25 years
of qualifying payments (or 10 years for borrowers qualified under the Public Service Loan
Forgiveness Program).
Navient also allegedly originated predatory subprime private 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. Navient allegedly made these
risky subprime loans as “an inducement to get schools to use Navient as a preferred lender” for
highly-profitable federal and “prime” private loans, without regard for borrowers and their
families, many of whom were knowingly ensnared in debts they could never repay.
Under the terms of the settlement, Navient will cancel the remaining balance on more than $1.6
billion in subprime private student loan balances owed by approximately 62,000 borrowers
nationwide. In addition, a total of $95 million in restitution payments of about $260 each will be
distributed to approximately 350,000 federal loan borrowers who were placed in certain types
of long-term forbearances. Borrowers who will receive restitution or debt cancellation span all
generations: 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.
As part of the settlement, Maine will receive a total of $308,422 in restitution payments for more
than 1,157 federal loan borrowers. Additionally, Maine borrowers will receive a total of
$4,896,415 million in private loan debt cancellation.
The settlement includes conduct reforms that require Navient to explain the benefits of income-
driven repayment plans and to offer to estimate income-driven payment amounts before placing
borrowers into optional forbearances. Additionally, Navient must train specialists who will advise
distressed borrowers concerning alternative repayment options and counsel public service
workers concerning Public Service Loan Forgiveness (PSLF) and related programs. The conduct
reforms imposed by the settlement include prohibitions on compensating customer service
agents in a manner that incentivizes them to minimize time spent counseling borrowers.
The settlement also requires Navient to 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—provided that they consolidate into the
Direct Loan Program and file employment certifications by October 31, 2022.
As a result of today’s settlement, borrowers receiving private loan debt cancellation will receive
a notice from Navient, along with refunds of any payments made on the cancelled private loans
after June 30, 2021. Federal loan borrowers who are eligible for a restitution payment of
approximately $250 will receive a postcard in the mail from the settlement administrator later
this spring.
Federal loan borrowers who qualify for relief under this settlement do not need to take any
action except update or create their studentaid.gov account to ensure U.S. Department of
Education has their current address. For more information, visit
www.NavientAGSettlement.com.
Until recently, Navient had a contract to service federal student loans owned by the U.S.
Department of Education, including a large portfolio of loans made under the Direct Loan
Program and a large portfolio of loans made under the Federal Family Education Loan (FFEL)
program. On October 20, 2021, the U.S. Department of Education announced the transfer of this
contract from Navient to AidVantage, a division of Maximus Federal Services, Inc. However,
Navient will continue to service federal student loans made under the FFEL Program that are
owned by private lenders, as well as non-federal private student loans.
Today’s settlement was led by Pennsylvania, Washington, Illinois, Massachusetts, and California,
and was joined by attorneys general in 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.
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January 13, 2022

FOR IMMEDIATE RELEASE

Attorney General Aaron M. Frey Announces $1.85 Billion Settlement

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