In recent years, Navient has been embroiled in numerous legal issues due to its mishandling of federal student loans. The most recent blow came in September 2024 when the Consumer Financial Protection Bureau (CFPB) permanently barred Navient from managing federal student loans. This decision is part of a broader initiative by the Biden administration to overhaul the student loan system. Navient’s improper handling of loan repayment plans for borrowers led to the sanctions, as the company failed to adequately assist borrowers in managing their debt.
As a result of these issues, Navient has agreed to pay $120 million as part of a settlement. Out of this, $100 million will be allocated to help borrowers who were directly affected by the company’s actions. This settlement follows a 2022 legal case in which Navient and its predecessor, Sallie Mae, were accused of predatory lending practices. They were charged with offering loans to students attending low-quality schools, knowing that many of the borrowers would struggle to repay them.
Understanding Navient Student Loan Forgiveness
If you’re a Navient borrower, you might be eligible for student loan forgiveness, but the process varies depending on whether you have private or federal student loans. The first step is to determine your loan type, as this will impact your eligibility for various forgiveness programs. Private loans may qualify for specific state or profession-based programs, while federal loans have more options for forgiveness.
The Biden administration has already forgiven around $168 billion in student debt, benefiting over 4.6 million borrowers. These efforts are part of an ongoing push to hold lenders and servicers like Navient accountable for their role in the student loan crisis. If you’ve been making consistent payments on your Navient loans, but still face financial hardship, there may be a path for forgiveness or cancellation.
What Is the Navient Student Loan Forgiveness Program?
Navient has quietly been offering a loan forgiveness program to some borrowers through a program known as the “school misconduct discharge”. This initiative was highlighted by the Project on Predatory Lending (PPSL), which noted that Navient had been submitting applications for loan forgiveness on behalf of borrowers who were misled by their schools. The borrower defense to repayment program, which cancels federal student loan debt for borrowers who believe their school engaged in fraud or deception, is similar to this initiative.
Steps to Apply for Navient Student Loan Forgiveness
If you’re looking to apply for Navient student loan forgiveness, here’s what you need to know:
- Determine Your Loan Type: First, you must check whether your loan is federal or private. If you attended a school that engaged in misconduct, you’ll want to make sure you apply for the appropriate forgiveness program, such as Public Service Loan Forgiveness (PSLF) or Income-Driven Repayment (IDR) plans for federal loans.
- Consolidate Your Loans: If you have FFELP (Federal Family Education Loan Program) loans, you’ll need to consolidate them into a Direct Consolidation Loan (DCL) before they can be eligible for certain forgiveness programs.
- Public Service Loan Forgiveness (PSLF): To qualify for PSLF, you need to work for an eligible employer, such as a government agency or nonprofit organization. Ensure you complete the PSLF form on studentaid.gov, track your qualifying payments, and submit annual proof of your employment.
- Enroll in an IDR Plan: Use the Loan Simulator on the Federal Student Aid website to find the best Income-Driven Repayment (IDR) plan for your situation. After applying, make regular payments for 20 or 25 years (depending on your plan) before your remaining balance is forgiven.
- Stay Informed About New Forgiveness Programs: In September 2024, a coalition of seven states led by Republicans filed a lawsuit against the Biden administration, aiming to halt a new student loan forgiveness initiative. This legal challenge may delay or alter the implementation of the program, but the administration continues to pursue ways to expand forgiveness opportunities.
What’s the Status of the Navient Settlement?
In the wake of the legal action against Navient, the company has agreed to pay a total of $120 million. This includes $100 million that will be distributed to borrowers who were negatively impacted by Navient’s practices. $20 million will go toward a civil penalty fund. However, don’t expect large payouts. If you’re eligible for the settlement, the amount you receive may be modest—likely around $100 per borrower, given the high number of borrowers potentially involved.
You do not need to apply for this settlement. The CFPB and the Department of Education (ED) will automatically determine which borrowers are eligible based on their account information. However, the fairness of this process has been called into question, particularly when it comes to proving that you were misinformed about PSLF or other loan repayment options. While it may be easier to argue that Navient charged excessive fees, other claims could be more challenging to substantiate.
How to Check Your Eligibility for the Navient Settlement
The settlement will not require an application on your part. The CFPB and ED will automatically review borrower information to determine eligibility. To find out if you are eligible, you can check your status through the CFPB’s or ED’s official website, or contact them directly.
What Can You Expect from the Navient Settlement?
While $120 million may sound like a significant sum, the individual payouts are expected to be modest. The settlement is part of the effort to rectify the financial harm caused by Navient’s mishandling of loans. For borrowers, the key takeaway is that loan forgiveness options still exist, and the government’s ongoing efforts to address predatory lending and repayment practices offer hope for relief.
Keep in mind, as legal challenges to new student loan forgiveness programs continue to unfold, the final outcome of these efforts may take time to fully materialize. However, with programs like PSLF, IDR, and borrower defense to repayment, there are still opportunities for borrowers to seek forgiveness and potentially have their loans canceled.
Conclusion
The legal troubles surrounding Navient have led to significant changes in the student loan landscape. With a $120 million settlement, including $100 million for borrowers, the government is taking steps to hold loan servicers accountable. If you’re a Navient borrower, it’s important to understand your loan type, explore forgiveness options, and stay informed about any new developments regarding student loan cancellation and forgiveness programs. Although the settlement may not provide immediate large payouts, these ongoing efforts are part of a broader push to offer relief to millions of borrowers burdened by student loan debt.
