If you’ve seen that Navient, one of the largest education loan management companies in the nation, will cancel $1, then don’t get too excited. 7 billion in student loan debt. Although the loan servicer’s forgiveness will benefit 66,000 borrowers of student loans in the U S. , it only represents a tiny portion of the outstanding student loan debt.
As of the fourth quarter of 2021, 43. 4 million borrowers held a collective $1. The Federal Student Aid Office of the Department of Education estimates that there are 61 trillion in federal student loan debt.
Josh Shapiro, the attorney general for Pennsylvania, declared in mid-January that Navient will cancel $1. To resolve claims of misleading servicing practices, private student loan debt totaling $7 billion will be forgiven. Navient announced intentions to leave the federal student loan servicing sector in September 2021. According to a statement issued by Shapiro’s office, the company was under investigation by 39 state attorneys general for “allegations of widespread unfair, deceptive, and abusive student loan servicing practices and abuses in originating predatory student loans.”
It’s crucial to note that Navient services both private and federal student loans, and that not all of its clients are eligible for the company’s most recent round of debt cancellations.
- There are three ways to get rid of Navient private student loans without paying the balance in full: Qualify for debt cancellation, negotiate a settlement, or file student loan bankruptcy. …
- Navient recently cleared its books of $1.7 billion in delinquent debt owed by 66 thousand of private student loan borrowers.
Who will get their debt canceled by Navient?
The entire settlement with Navient totals $1.85 billion. The majority of that amount—or about $1.7 billion in forgiveness—will cover the cost of canceling the remaining balance on subprime private student loan balances of about 66,000 borrowers.
According to Navient, borrowers who had loans that were issued between 2002 and 2010 but later defaulted will be forgiven. According to Shapiro, two “deceptive and unfair schemes” affected borrowers. ”.
Shapiro stated in a statement in January that “the first scheme involved Navient issuing subprime private loans to borrowers they knew could not pay the money back—similar to the mortgage crisis in 2008”. “The second scheme we discovered was Navient’s push to trick borrowers into forbearances, which prevented them from paying down the principal on their loan and caused many of them to accrue more debt and never-ending interest payments,” the investigation found. ”.
Navient never admitted to or confirmed these allegations, calling them “unfounded claims.” Still, the company is paying off borrowers to “avoid the additional burden, expense, time, and distraction to prevail in court,” Navient’s chief legal officer Mark Heleen said in a statement.
Another $95 million from the $1. According to Shapiro’s office, a portion of the $85 billion settlement will be used to pay about 350,000 federal student loan borrowers who were put into long-term forbearance restitution payments of about $260 each.
While about 350,000 borrowers will get a small paycheck for their forbearance troubles, not all of Navient’s federal borrowers—or private, for that matter—will receive forgiveness. Navient has “millions” of federal and private student loan borrowers, with the most recent released number being 12 million customers in 2017 for a total of $300 billion in student loans serviced.
Despite the fact that millions of Navient borrowers won’t receive loan forgiveness, hundreds of thousands will It’s also unlikely that you would qualify if you opened an account with Navient more recently because the cancellations are mostly affecting accounts that were created in the early 2000s.
The cancellations will primarily affect Navient’s private student loan clients. Customers of federal student loans who are deemed to have been placed in long-term forbearances are only receiving a small amount of restitution.
“We are frustrated that federal student loan borrowers are left crushed by debt despite Navient’s obvious track record of abuse,” Cody Hounanian, executive director of the Student Debt Crisis Center, said in a statement. “The predatory student loan industry’s actions harmed a generation’s hopes of a better future, widened the racial wealth gap, and stole the American dream in exchange for profits. [The] announcement is a step in the right direction, but more must be done.”
FAQ
Will my private Navient loan be forgiven?
Only holders of federal student loans are eligible for those opportunities for forgiveness. Borrowers with private loans can only receive relief in the event of a disability or death. And even then, their cosigner might be required to cover the remaining debt.
Who is eligible for Navient debt cancellation?
The loan cancellation program only applies to loans held by the Department of Education. By consolidating their loans into Direct Loans, borrowers with federal student loans that are not held by ED as of September 29, 2022, will not be able to get one-time debt relief.
How do I know if Navient will cancel my debt?
Navient will notify some private loan borrowers that their qualifying private loan has been canceled and that the tradeline associated with the loan will be removed. (Information about a consumer account sent to credit bureaus is known as a tradeline.)
Can private student loans be written off?
Private student loans are not eligible for student loan forgiveness programs; only federal student loans are. Although private student loan forgiveness does not exist, you do have other options that may make paying back your private student loans easier.