Thousands of Kentucky students will benefit as Attorney General Daniel Cameron on Thursday announced a $1.85 billion settlement between 39 attorneys general and Navient Corporation and its subsidiaries over their handling of student loans.
Navient, known as one of the nation’s largest student loan managers, has agreed to pay out $1.85 billion to 38 states and the District of Columbia. Kentucky will receive $1,419,027.64, including $1,241,950 in restitution to 4,659 Kentucky borrowers.
The consent judgment resolves alleged violations of consumer protection law related to Navient’s allegedly deceptive student loan servicing practices. Under the terms of the settlement, Navient will cancel the remaining balance of more than $1.6 billion in private student loan balances for 62,000 borrowers nationwide, including $43,042,898 million in balances for 2,155 residents of Kentucky.
“This settlement cancels more than $43 million in debt and provides more than $1.2 million in restitution to Kentuckians; and requires Navient to change its business practices to protect future borrowers,” Cameron said. “Our Consumer Protection Office is working diligently to protect Kentucky consumers and this settlement is part of our efforts.”
Borrowers whose loans were canceled as a result of this settlement will receive notice from Navient and a refund for payments made after June 30, 2021. Federal borrowers eligible for a restitution payment must update or create a studentaid.gov account, including their current mailing address, as the Settlement Administrator will send a postcard with additional information later this spring.
Under other provisions of the settlement, Navient is required to:
- Explain the benefits of income-based repayment plans and offer to estimate income-based payment amounts before placing borrowers in optional forbearances.
- Train specialists who will advise troubled borrowers on alternative repayment options and advise civil servants on the cancellation of civil service loans (PSLF) and related programs.
- Stop paying customer service agents in a way that incentivizes them to minimize the time spent advising borrowers.
- Inform borrowers of the PSLF Limited Waiver recently announced by the U.S. Department of Education, which is temporarily providing millions of skilled government workers with the ability to have previously ineligible repayment periods taken into account for the cancellation of the loan, in certain circumstances.