Navient To Forgive $41 Million In Massachusetts Student Loans

MASSACHUSETTS — Navient, once known as one of the leading student loan providers across the country has settled allegations of predatory lending practices for $1.85 billion, Attorney General Maura Healey said Thursday.

The settlement includes $1.7 billion in debt cancellation and $95 million in restitution.

In Massachusetts alone, Navient has agreed to forgive $41 million in private loans for 1,523 borrowers, giving residents more than $6 million from the settlement, including $2.2 million in restitution for over 8,300 federal loan borrowers, Healey said.

Healey accused Navient of being deceptive during a Zoom meeting, saying much of this debt could have been avoided had Navient used the proper tools to guide borrowers towards income-driven repayment plans that could have significantly lowered their monthly payments, rather than their practice of guiding them towards forbearance.

"Student borrowers in Massachusetts were driven further into debt by Navient at a time when they needed help the most," Healey said during the Zoom meeting.

Formerly known as Sallie Mae, Navient is accused of originating loans that were allegedly deceptive and unfair, resulting in "lifetimes of crushing student loan debt" and putting "borrowers on the hook" for their bottom line.

"Students should not pay for Navient's mistakes," Healey tweeted Thursday morning.

As a result, Navient will forgive $1.7 billion in debt and pay $142.5 million to compensate 350,000 borrowers across the country.

Healey said Navient will also have to change the way they do business going forward, providing better guidance for borrowers.

"We allege that Navient lied to students," Arwen Thoman, Deputy Director of Insurance & Financial Services Division at Massachusetts Attorney General's Office said on the Zoom call.

"This fundamentally is about unfairness," Healey added, mentioning that student loan debt has topped 1.8 trillion in the U.S.

Healey said that eligible borrowers don't need to do anything to claim their part of the settlement because payments will be sent out in the mail, but urged borrowers to update their contact information here.