$34M In 'Predatory' Navient Student Loan Debt Canceled In MD: AG

MARYLAND — Maryland Attorney General Brian E. Frosh announced Thursday that Navient Corporation, one of the nation’s largest student loan servicers, will provide relief totaling $1.85 billion to resolve allegations of unfair and deceptive student loan servicing practices and abuses in originating predatory student loans.

Maryland was one of 39 states to sue Navient, claiming that since 2009, despite representing that it would help borrowers find the best repayment options for them, Navient Corporation steered struggling student loan borrowers into costly long-term forbearances instead of counseling them about the benefits of more affordable income-driven repayment plans.

“We alleged that Navient’s conduct was illegal and burdened struggling Marylanders with additional student debt,” Attorney General Frosh said in a news release. “I am pleased that thousands of Marylanders will receive a significant amount of relief under this settlement.”

Under the terms of the settlement, Frosh's office said that Navient will cancel the remaining balance on more than $1.7 billion in subprime private student loan balances owed by about 66,000 borrowers nationwide.

In addition, a total of $95 million in restitution payments will be distributed to about 350,000 federal loan borrowers who were placed in certain types of long-term forbearances.

More than 1,100 Marylanders will be relieved from having to pay more than $34 million in student loan debt; 11,836 Marylanders will also be receiving restitution checks totaling $3,155,124, according to the Maryland Attorney General's Office.

The settlement also includes an injunction that requires 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, the attorney general's office said that Navient must train specialists who will advise distressed borrowers concerning alternative repayment options and counsel public service workers concerning PSLF and related programs. The company is also prohibited from compensating customer service agents in a manner that incentivizes them to minimize time spent counseling borrowers, the Maryland Attorney General's Office said.

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 Oct. 31, 2022.

Consumers receiving private-loan debt relief under the settlement will receive a notice from Navient. Federal loan borrowers who are eligible for a restitution payment 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 the U.S. Department of Education has their current address.

For more information, visit www.NavientAGSettlement.com.