- Navient, one of the largest student loan servicers, will cancel $1.7 billion in private student loans after a deal it reached with 39 states.
- The lender was accused of giving out private loans to students who would be unable to pay them.
- As part of the settlement, Navient denied that it violated the law.
The settlement, announced on Thursday, resulted from accusations the lender gave out loans to millions of borrowers who’d be unlikely to be able to repay them. It resolves all six outstanding state lawsuits against Navient, company officials said.
Nearly 66,000 borrowers are expected to get their loans cleared under the $1.85 billion deal.
“At long last, the student loan borrowers who had been forced to shoulder the burden of dangerous and predatory private student loans made by Sallie Mae and owned by Navient will finally be debt-free,” said Mike Pierce, executive director of the Student Borrower Protection Center. The company was formed in 2014 by the split of Sallie Mae into two entities: Sallie Mae Bank and Navient.
As part of the settlement, Navient denied that it violated the law.
The private student loan market has grown by more than 70% over the last decade, and stands at around $130 billion, according to a recent report by the Student Borrower Protection Center.
By the end of 2019, Americans owed more in private student loans than they did for past-due medical debt or payday loans.