Oregon Attorney General Ellen Rosenblum today announced a $1.85 billion settlement with 39 state Attorneys General with Navient, one of the nation’s largest student loan servicers, that resolves allegations of widespread unfair and deceptive student loan servicing practices and abuses. Of the settlement, $95 million will go directly toward restitution for students and $1.71 billion in debt cancellation.
In Oregon, that means 5,488 federal loan borrowers will receive $1,462,937 in restitution and 864 borrowers will receive $22,454,017 in private loan debt cancellation.
Borrowers who qualify for relief do not need to do anything to receive their restitution or cancellation. They will receive a notice from Navient directly, but borrowers should update or create their studentaid.gov account to ensure that the U.S. Department of Education has their current address. For more information, visit www.NavientAGSettlement.com.
“For over a decade, Navient promised student loan borrowers it would help them find the best repayment options. Instead, they steered struggling borrowers into more costly payment plans, ” said Attorney General Rosenblum. “Today we’re getting some of that money back and putting it into the hands of Oregonians who’ve been harmed. I sincerely hope this will help many of them move on with their lives. We will never break the cycle of student debt, if we don’t hold student loan servicers accountable.”
According to the Attorneys General, the interest that accrued because of Navient’s forbearance steering practices was added to the borrowers’ loan balances. Had the company instead provided borrowers with the help it promised, income-driven repayment plans could have potentially reduced payments to as low as $0 per month, provided interest subsidies, and/or helped attain forgiveness of any remaining balance after 20-25 years of qualifying payments (or 10 years for borrowers in the Public Service Loan Forgiveness Program). Navient also allegedly originated predatory subprime private loans to students attending for-profit schools and colleges with low graduation rates, even though it knew that a very high percentage of such borrowers would be unable to repay the loans.
The settlement also requires Navient to notify borrowers about the U.S. Department of Education’s recently announced PSLF limited waiver opportunity, which temporarily offers millions of qualifying public service workers the chance to have previously nonqualifying repayment periods counted toward loan forgiveness—provided that they consolidate into the Direct Loan Program and file employment certifications by October 31, 2022.
During the last Oregon legislative session, Attorney General Ellen Rosenblum initiated and championed SB 485 or a “Student Loan Borrowers Bill of Rights”. The law addresses many of the problems Oregon borrowers have experienced with student loan servicers, including navigating the complex refinancing options. The law creates a student loan ombudsperson to help educate and counsel student loan borrowers. The law requires student loan servicers to be licensed with the Oregon Department of Consumer Business Services which will also monitor, and, if necessary, sanction student loan servicers who engage in fraudulent, deceptive, or dishonest behavior.
Today’s settlement was joined by 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.