Defaulted Private Student Loans Informational, Commercial

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Navient is one of the nation’s largest student loan servicers, used by millions of borrowers to repay their federal and private student loans. However, over the years, numerous lawsuits have alleged harmful and deceptive practices that can affect student loans.

Servicers have now reached settlements in some of those lawsuits that will discharge more than $1 billion in student loans, but more relief is available down the line.

Since 2017, Navient has had its fair share of lawsuits. Here’s what you need to know about which lawsuits have closed and which are ongoing.

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Over the years, several states have filed lawsuits against Navient alleging unfair lending practices, fraud and mishandling of loan products. The attorneys general of those states alleged, among other things, that Navient induced unnecessary forbearance in lieu of cheaper alternatives, intentionally approved loan repayments for borrowers they could not afford, and told borrowers they owed more than they actually owed.

On January 13, 2022, Naviente expanded to 38 states and Washington, D.C. It reached a $1.85 billion settlement agreement with those states that resolves ongoing litigation. Under the settlement, Navient must forgive $1.7 billion in private student loan balances for about 66,000 borrowers who took out subprime mortgages to attend primarily for-profit schools. Navient will also distribute individual refund payments of $260 to approximately 350,000 federal borrowers who have been placed in long-term forbearance.

Eligible private borrowers will receive notification from Navient by July 2022, and federal borrowers should receive a postcard from the settlement administrator in the spring of 2020.

On January 17, 2017, the Consumer Financial Protection Bureau filed a lawsuit against Navient, alleging that the servicer misled borrowers by providing incorrect and sometimes false information, improperly processing payments, and failing to take appropriate actions to remedy the situation related to borrowers’ complaints. causing damage.

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The CFPB also alleged that Navient failed to allow some borrowers to pay off their loans when they were eligible. “Severely and permanently disabled federal student loan borrowers, including veterans whose disabilities are related to their military service, are eligible for loan forgiveness under the federal total and permanent disability discharge program,” the CFPB says. “Navient falsely reported to credit reporting companies that borrowers who defaulted on their loans under this program were in default when they were not.”

Navient moved to dismiss the lawsuit in 2020, but the appeal was unsuccessful. As of early 2022, the CFPB lawsuit is still pending.

Thousands of borrowers will see their student loans impacted in some way by the recent Navient settlement, whether it’s loan forgiveness, repayment, or better customer service. Borrowers don’t have to do anything to get their settlement reinstated or dismissed except verify and update their address.

Navient said the latest settlement primarily affects borrowers who took out loans to for-profit schools between 2002 and 2010 and defaulted on the loans. However, there is still a CFPB lawsuit pending, which, if settled, could affect more borrowers.

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In early 2022, Borrower transferred its federal student loan portfolio to Maximus’ servicing division, Advantage. The company now only provides private student loans and privately owned FFELP loans.

If you have a federal loan, check with your Department of Education servicer. The best way to find out who is servicing your private loan is to look at your most recent student loan correspondence. You can also find the names of all providers on your credit reports, which you can access for free at AnnualCreditReport.com. This allows you to view all of your debts, including past due, delinquent or unpaid debts.

If you believe your lender is engaging in misleading or deceptive practices, here are some steps you can take to protect yourself and your money.

Hanneh Berheim has been a personal finance writer since 2020. He started as a credit card reporter before transitioning to a role as a student loan reporter. He is currently a writer for the Loans team, further expanding his scope to include multiple forms of consumer loans.

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Edited by Chelsea Wing Edited by Chelsea WingArrow Right Form Editor Student Loans Invested in helping students navigate the high costs of college and navigate the complexities of student loans. Connect with Chelsea Wing on LinkedIn Linkedin Chelsea Wing Form Editor Student Loans ANavient continues to offer federal and private loan services. Is my Navient loan federal or private? Forgiveness and Repayment Options Need help with your Naviant Student Loan? let’s talk

Navient sent most of its federal student loans to Advantage, but continues to service FFEL loans and private student loans.

Navient was one of the largest servicers of federal student loans before its contract with the Department of Education expired last December and it moved millions of accounts to Advantage. Today, Navient still services federal loans from the Federal Family Education Loan Program, as well as millions of private student loans to a variety of lenders.

The best way to find out if your student loan is federal or private is to use studentaid.gov. Once you’ve logged in

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Defaulted Private Student Loans Informational, Commercial