Resolves claims of unfair, deceptive practices
SALEM, Ore. (KTVZ) – Oregon Attorney General Ellen Rosenblum on Thursday announced a $1.85 billion settlement by 39 attorneys general with Navient, one of the nation’s largest student loan servicers, alleging widespread unfair and deceptive practices in servicing student loans and abuse.
Of the settlement, $95 million will go directly to student reimbursement and $1.71 billion to debt relief.
In Oregon, that means 5,488 federal borrowers will receive $1,462,937 in reimbursement and 864 borrowers will receive $22,454,017 in debt service.
Borrowers eligible for relief do not need to do anything to get their refund or cancellation. You will receive a direct notification from Navient, but borrowers should update or create their studentaid.gov account to ensure the US Department of Education has their current address. More information is available at www.NavientAGSettlement.com.
“For over a decade, Navient promised student loan borrowers that it would help them find the best repayment options. Instead, they steered ailing borrowers into more expensive payment plans,” Rosenblum said. “Today we are getting some of that money back and putting it into the hands of Oregonians who were harmed. I sincerely hope that this will help many of you move on with your life. We will never break the cycle of student debt if we do not hold student loan servicers accountable.”
According to attorneys general, interest accrued as a result of Navient’s forbearance control practices was added to borrowers’ loan balances.
Had the company provided borrowers with the promised assistance instead, income-based repayment plans could have potentially reduced payments as low as $0 per month, provided interest rebates, and/or helped waive balance after 20-25 years of qualifying payments ( or 10 years for borrowers in the Public Service Loan Forgiveness Program).
Navient also reportedly made predatory subprime personal loans to students attending for-profit schools and colleges with low graduation rates, although it knew that a very high percentage of those borrowers would be unable to repay the loans.
The settlement also requires Navient to notify borrowers of the limited PSLF waiver recently announced by the U.S. Department of Education, which provides millions of qualified government employees with the temporary ability to have previously non-qualifying repayment periods count towards loan forgiveness – provided they consolidate submit themselves to the Direct Loan Program and certificates of employment by October 31, 2022.
During the last Oregon legislature, Rosenblum said she initiated and championed SB 485, or a “Bill of Rights for Student Loan Debtors.”
The law creates a student loan ombudsperson to help educate and advise student loan borrowers. The law also requires student loan service providers to be licensed by the Oregon Department of Consumer Business Services, which also monitors and, where appropriate, sanctions student loan service providers who engage in fraudulent, deceptive, or dishonest conduct.
Thursday’s settlement was joined by the Attorneys General of Arizona, Arkansas, California, Colorado, Connecticut, the District of Columbia, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, Washington, West Virginia and Wisconsin.