Business

/

ArcaMax

Student-loan giant Navient agrees to $1.8 billion deal with 39 states, denies wrongdoing

Bob Fernandez and Erin Arvedlund, The Philadelphia Inquirer on

Published in Business News

According to the Pennsylvania Office of Attorney General, 13,000 Pennsylvania student loan borrowers will receive $3.5 million in restitution payments and, in addition, 2,467 Pennsylvanians will receive $67 million in debt cancellation -- or $27,158 per borrower.

New Jersey’s acting Attorney General Bruck said that New Jersey student loan borrowers will receive over $60 million from a settlement with Navient that resolves a 2020 lawsuit filed by the state. The lawsuit alleged that Navient engaged in unconscionable commercial practices, deceptive conduct, and misrepresentations when servicing thousands of New Jersey consumers’ student loans over the past decade – boosting company profits at the expense of struggling borrowers.

The New Jersey portion comprises approximately $57.2 million in debt relief and $3.1 million in restitution payments to borrowers, as well as a $3 million payment to the state.

A separate lawsuit against Navient by the Consumer Financial Protection Bureau is ongoing, and claims are similar to the state attorneys general lawsuits.

“We are confident that we will prevail at trial against the CFPB. After years of investigation, discovery and litigation, the CFPB has failed to produce a single borrower to substantiate its claims because they don’t exist,” Navient said in its statement. More information on the CFPB suit is available at navient.com/legalfacts.

Navient in September requested government approval to end its loan servicing contract for student-loan accounts owned by the U.S. Department of Education.

Those six million borrowers’ accounts are to be transferred to Maximus, another competing government-loan servicing company.

 

Federal student loan borrowers are expected to resume payments in May 2022 after a hiatus because of the pandemic. Borrowers who once paid Navient will instead have payments processed by Maximus.

FedLoan, part of the Pennsylvania Higher Education Assistance Agency (PHEAA) in Harrisburg, also will relinquish its federal student loan servicing business after U.S. Sen. Elizabeth Warren (D., Mass.) targeted PHEAA CEO James Steeley for allegedly misleading her committee in an April hearing. In July, FedLoan said it wouldn’t renew its federal loan servicing contract when it expired in December.

Student Advocates Applaud Deal

Student Borrower Protection Center executive director Mike Pierce praised the deal.:

“At long last, the student loan borrowers who had been forced to shoulder the burden of dangerous and predatory private student loans made by Sallie Mae and owned by Navient will finally be debt free. Today’s action is a clear victory for many of the millions of borrowers whose pain Navient and Sallie Mae shamelessly turned into profit.

“Borrowers may not be able to enjoy Navient CEO Jack Remondi’s $8 million salary, his three homes, or his use of the company’s private jet. But they can rest a little bit easier knowing that a measure of justice has been served,” he said.

©2022 The Philadelphia Inquirer, LLC. Visit at inquirer.com. Distributed by Tribune Content Agency, LLC.