Who is Eligible for Navient Student Loan Settlement?

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3News Legal Analyst Stephanie Haney Explains Which Ohioans Will Have Their Navient Private Student Loans Cancelled, And Which Will Only Receive a $260 Payment

CLEVELAND— Legal analysis: As the debate continues over whether President Joe Biden will (or will) keep his campaign promise to forgive large chunks of federal student loan debt for struggling Americans, relief is coming for some. borrowers who hold federal and private Navient student loans.

Legally speaking, Navient is accused of engaging in unfair and deceptive student loan servicing practices, resulting in a lawsuit that was recently settled to benefit hundreds of thousands of borrowers.

Ohio is one of 39 states, plus Washington, DC that filed court documents indicating that the company convinced people with federal student loans to choose repayment options that ended up costing them a lot more money in the long run. The loan manager has also been called out for allowing students at for-profit schools to take out risky private loans that they most likely could never repay, in an effort to get those same for-profit schools to consider it. . a preferred lender for more attractive federal loans.

Navient, which is one of the largest student loan providers in the country, admitted none of this (which is common in large settlements like this), but did agreed to pay a lot of money and cancel a lot of that debt to avoid going to court and challenging an official determination of liability.

People with those risky, subprime private loans that ended up missing payments will see those loans completely forgiven. In the United States, this represents $1.7 billion in canceled debt for 66,000 people. About $82 million of that sum belongs to about 3,500 Ohioans who are about to get a nice break from the student loan department.

Ohioans who qualify for cancellation, for the most part, include borrowers who had low credit scores when they took out subprime private student loans through Navient’s predecessor, Sallie Mae, between 2002 and 2014, and then had more than seven consecutive months of outstanding payments late or missed before June 30, 2021.

Some other non-subprime private student loans to be canceled include those made by Sallie Mae Bank and certain other lenders between 2002 and 2014 for borrowers to attend specific for-profit schools that have been subject to federal enforcement action. or state.

If you have federal student loans with Navient, don’t expect a big payout, but nationwide the company will have to pay around $95 million in restitution to 350,000 people. Nearly 20,000 of those people are here in Ohio. Holders of these loans will receive a check for approximately $260 each.

The courts in each location where Navient was sued must individually approve these settlement numbers. In Ohio, Judge Mark A. Serrott of the Franklin County Court of Common Pleas signed the settlement Jan. 24. (You can read the Consent Judgment Order here.)

With the order now in to approve the settlement, those who qualify to have their private loans canceled will receive notice by July. These same people are also entitled to reimbursement of any payment made after June 30, 2021. These people do not have to do anything. The company knows who you are and will contact you.

People with federal loans who were placed in certain long-term forbearance repayment plans that ended up costing them extra money in interest and fees are the ones who will get that $260 check. To be eligible for this payment, borrowers must have entered their federal student loan repayment before 2015, been eligible for an income-based repayment plan, but instead were guided by a Navient employee to enter the abstention by telephone, and retained this abstention. in place for at least two years.

If you qualify for one of these payments, the only thing you need to do at this point is make sure your address is up to date with studentaid.gov, and you’ll hear Navient in the spring.

(Going forward, Navient should also explain the benefits of income-based repayment plans and offer estimated payment amounts based on income before placing borrowers in optional forbearances where payments are suspended but interest still accrues .)

In addition to those payments, Navient must pay $142.5 million to the attorneys general who filed the original lawsuit and is required to reform its lending practices. To learn more about these reforms, see the Ohio Attorney General’s website, here.

Stephanie Haney is licensed to practice law in Ohio and California.

The information in this article is provided for general informational purposes only. None of the information in this article is offered, and should not be construed, as legal advice on any subject.

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