Navient, a private student loan agency, just announced that it will cancel the loans of 66,000 different borrowers — the amount of loans forgiven totals $1.7 billion.
Navient will forgive the privately-issued loans in an agreement with the attorney generals of 40 different states. Navient’s move will avoid six lawsuits against the lender claiming that the company engaged in deceptive lending practices. Navient will make a $145 million payment to the states involved in the settlement.
Navient’s Chief Legal Officer, Mark Heleen, said: “The company’s decision to resolve these matters, which were based on unfounded claims, allows us to avoid the additional burden, expense, time and distraction to prevail in court.” If you can’t speak legal/PR, we’re pretty sure this means Navient paying up is cheaper than the costs of a prolonged court battle. 😅
The loans involved in Navient’s forgiveness were issued between 2002 and 2010 and have since defaulted. Josh Shapiro, Pennsylvania’s Attorney General, commented:
“Navient repeatedly and deliberately put profits ahead of its borrowers—it engaged in deceptive and abusive practices, targeted students who it knew would struggle to pay loans back, and placed an unfair burden on people trying to improve their lives through education.”
Navient is also awarding restitution to federal borrowers whose loans resulted in higher-than-necessary debt accumulation. While Navient pays restitution to those borrowers in addition to settlement costs, the Biden Administration has terminated its partnership with private agencies which collect repayments from federal student loan recipients.
$NAVI stock traded sideways today, ended the day +37 bips. Could Navient’s settlement be an indicator of more investigations to come?? 🤔 Here’s the WSJ with more.