What Navient Was Accused Of
Navient, once one of the largest student-loan servicers, was accused by a coalition of state attorneys general of steering struggling borrowers into long-term forbearance — which lets interest pile up — instead of counseling them toward more affordable income-driven repayment plans, and of originating predatory private loans to students at schools with low graduation rates. The alleged result was that borrowers paid far more than they needed to.
Forbearance steering is costly precisely because unpaid interest capitalizes onto the principal, quietly enlarging the debt.
The $1.85 Billion Settlement
In January 2022, Navient agreed to a $1.85 billion settlement with 39 states. It included about $1.7 billion in cancellation of certain private student-loan balances for roughly 66,000 borrowers, plus $95 million in restitution — payments of about $260 each — to around 350,000 federal-loan borrowers who had been placed in long-term forbearance. Borrowers receiving debt cancellation were notified directly.
The settlement resolved the states’ claims; Navient did not admit wrongdoing and has since exited much of the federal student-loan servicing business.
What Borrowers Should Know
The relief in this settlement was largely automatic — eligible borrowers were notified directly rather than filing claims — so beware anyone charging a fee to “get your Navient relief.” More broadly, if you are struggling with federal loans, income-driven repayment is the option the settlement faulted Navient for not promoting.
Before You Act
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Navient Student Loan Settlement: The $1.85 Billion Deal: Frequently Asked Questions
Answers to the most common questions about this case and your legal options.
How much was the Navient settlement?
$1.85 billion with 39 states in January 2022: about $1.7 billion in private-loan debt cancellation for ~66,000 borrowers, plus $95 million in restitution (~$260 each) to ~350,000 federal borrowers.
What did Navient allegedly do?
Steered struggling borrowers into costly long-term forbearance instead of income-driven repayment, and made predatory private loans, so borrowers paid more than necessary.
Do I need to file a claim for Navient relief?
The relief was largely automatic, with eligible borrowers notified directly. Be wary of anyone charging a fee to obtain 'Navient relief' for you.
Legal Disclaimer
This article is general legal information, not legal advice, and does not create an attorney-client relationship. Case status, eligibility criteria, and any amounts described are as reported at the date shown and may change. Consult a licensed attorney in your jurisdiction about your own situation.