BOSTON (AP) – Navient, a large student loan collection company, has agreed to pay off $ 1.7 billion in debt owed by more than $ 66,000 in loans in the United States and pay more than $ 140 million in other penalties to settle allegations of abusive practices. borrow.
The $ 1.85 billion deal with 39 state attorneys general was announced Thursday.
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Navient “is engaged in deceptive and abusive practices, targeted students who knew they would have difficulty repaying loans, and placed an unfair burden on people trying to improve their lives through education,” the prosecutor said. Pennsylvania General Josh Shapiro, who helped lead the negotiations. in a statement.
Among other things, he said, Navient has tricked borrowers who were having trouble making payments to get into what are known as long-term forbearances, which has caused them even more debt.
Tolerance is when lenders allow lenders to pause or reduce payments for a limited time while rebuilding their finances. However, the interest on the loan continues to rise and may, in the end, cause the amount paid over the life of the loan to be higher.
Navient has refused to act illegally, and has not admitted any wrongdoing under the agreement, which is subject to court approval.
“Navient is and has been continuously focused on helping student lenders understand and select the right payment options to meet their needs,” Chief Legal Officer Mark Heleen said in a statement.
In addition to forgiving tens of thousands of loans, Navient will pay $ 142.5 million, most of which will go to about 350,000 loans that have been placed in long-term forbearances.
In addition, Navient will be required to do more to advise the lenders of their options and explain the repayment plans for them.
Massachusetts Attorney General Maura Healey called the facility “an important step toward tackling our broken student loan repayment system.”
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Among the beneficiaries is Ashley Hardin, 38, of Seattle. Hardin jumped about $ 108,000 in private student debt in 2020 after losing for more than a decade trying to pay off a loan he had used to attend the Brooks Institute of Photography in California.
His monthly payments were often more than his rent. For a while, Navient agreed to lower its payments to about $ 650 per month, but when that period ended, he owed more than $ 1,000 again, having to pay compound interest.
“She’s a massive high weight,” said Hardin, who has not been able to pursue a photography career in Seattle and now runs a food truck with her husband. “I can breathe again and I don’t feel drowned, as I won’t get a call tomorrow that I’m in court by default.”
Helena Moon, 34, was accepted to her “dream university” – Howard University – when she was 18 years old. When financial aid and scholarships were not enough, he sought private loans and found himself accompanied by phone calls and letters from lenders after graduation. . Moon, who lives in Washington DC, said the experience was also stressful for her mother, a loan co-signer.
“This is a step forward in racial equality when you think about the percentage of African Americans in debt in that country,” he said of the establishment.
Kelly Feeherry, 34, of Franklin, Massachusetts, described her experience using loans to attend art school as a “living nightmare” that threatened to sell her debt for life.
“What the settlement means to me is that I can finally get my credit back,” he said.
Loans whose loans are canceled will receive a notice from Navient along with repayments of any payments made after mid-2021.
The establishment also includes Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska. , Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, Washington, West Virginia and Wisconsin.
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