FLORIDA, USA — Navient, a major student loan collecting company, agreed to cancel $1.7 billion in debt owed by more than 66,000 borrowers across the U.S. and pay over $140 million in other penalties to settle allegations of abusive lending practices.
The settlement was a result of multi-state action taken by 39 state attorneys — including Florida Attorney General Ashely Moody — who say the company "misrepresenting to borrowers the best repayment options available."
Overall, Florida will receive more than $199 million in relief, according to a press release.
The funds breakdown to the following:
- $11,023,208 in restitution payments will go to 41,352 federal loan borrowers.
- $187,312,668 in private loan debt cancellation.
“Despite promising to help find the best loan repayment option, this company steered distressed borrowers to costly long-term forbearances—pushing them further into debt and financial hardship," Moody wrote in a press release.
"Due to our multistate investigation and aggressive negotiations, this company’s predatory lending practices are now at an end, and Floridians harmed will receive millions of dollars in restitution," she added.
Navient “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,” Pennsylvania Attorney General Josh Shapiro, who helped lead the negotiations, said in a statement.
According to a press release, if the agreement reached is approved by the court, claims that Navient failed to "properly counsel struggling student loan borrowers" since 2009 would be resolved.
Navient denied acting illegally, and it did not admit to any wrongdoing under the settlement.
“Navient is and has been continually focused on helping student loan borrowers understand and select the right payment options to fit their needs,” Chief Legal Officer Mark Heleen said in a statement.
Also, Navient will be required to do more to advise borrowers of their options and explain repayment plans to them.
Borrowers whose loans are canceled will receive notice from Navient along with refunds of any payments made after mid-2021.