Navient Student Loan Settlement: Who Qualifies For Relief, And What To Do

Yesterday, 39 state attorney general offices announced that a settlement was reached in ongoing litigation against Navient NAVI , one of the nation’s largest student loan providers.

The settlement is intended to resolve claims that Navient allegedly improperly steered some federal student loan borrowers into forbearance — instead of federal student loan relief programs like Income Based Repayment and Public Service Loan Forgiveness (PSLF) — and issued high-interest private student loans to borrowers attending predatory for-profit schools where they were unlikely to succeed or be able to repay their loans. Navient has consistently denied any wrongdoing, and the company admitted to no liability as part of the settlement agreement.

The settlement agreement includes provisions for student loan forgiveness for certain Navient private student loans, and modest restitution for some federal student loan borrowers. Here’s what you need to know.

Student Loan Forgiveness For Some Navient Private Student Loans

The settlement agreement for Navient provides for $1.7 billion in private student loan cancellation. Here are the details:

• Only certain private student loans issued by Navient or its predecessor, Sallie Mae.
• Qualifying borrowers must have attended certain for-profit educational institutions such as Corinthian schools, DeVry University, the Art Institutes, ITT Technical Institutes, and others.
• The student loans must have been disbursed between 2002 and 2014.
• The student loans must have been delinquent (behind on payments) for at least seven monthly billing cycles prior to June 30, 2021.
• In most cases, only loans that are still collectible under the applicable statute of limitations, or are still being reported to credit bureaus, as of June 30, 2021, are eligible.
• Borrowers must live in specific states covered by the settlement. Many, but not all, states will qualify.

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Federal student loans are not eligible for cancellation under the settlement. But these borrowers may be eligible for Borrower Defense to Repayment, a federal student loan forgiveness program that can cancel the federal student loan debt for borrowers who were defrauded by their school.

Restitution For Some Federal Student Loan Borrowers

While no federal student loans are being forgiven or cancelled under the settlement agreement with Navient, many borrowers will receive a modest financial award called restitution. About 350,000 borrowers will be eligible for around $95 million in restitution, which comes out to around $260 to $270 per borrower. There are eligibility criteria:

• Borrowers must have entered repayment on a Direct or FFEL-program federal student loan before January 2015.
• Borrowers must have had at least one federal student loan that was eligible for income-driven repayment between October 2009 and January 2017, but they were instead steered into a forbearance as a result of a phone call with a Navient customer service agent. The borrower must not have been in an income-driven repayment plan prior to that forbearance.
• The forbearance must have lasted at least two consecutive years. At least half of the forbearance must have been to postpone payments going forward, as opposed to a retroactive forbearance to bring a delinquent account current.
• Borrowers must reside in one of these states: AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, IL, IN, KY, LA, MA, MD, ME, MN, MO, NC, NE, NJ, NM, NV, NY, OH, OR, PA, TN, VA, WA, or WI.

Do Student Loan Borrowers Need To Do Anything To Get Relief Under the Navient Settlement?

The relief being provided under the Navient student loan settlement will be distributed automatically. Borrowers should be notified sometime this summer if they qualify. All borrowers need to do is make sure that their contact information is up to date, particularly with their federal student loan servicer and StudentAid.gov, the Department of Education’s federal student aid website. There is no application process for borrowers to request relief.