One of the nation’s largest student loan services agreed to pay a nearly $2 billion settlement after 38 states and the District of Columbia claimed it deceived thousands of students to pay more than they should have.
The company Navient, formerly Sally Mae, is accused of pushing borrowers into subprime, private loans they knew most would be unable to repay. Navient is also accused of steering students into costly, long-term forbearance plans instead of counseling them about a more affordable repayment plan.
Pennsylvania Attorney General Josh Shapiro called the practice a “multi-billion dollar scam.” Adds Massachusetts Attorney General Maura Healey, “These loans were doomed to fail from the start and Navient knew it.”
The agreement cancels nearly $1.7 billion dollars in balances owed by 66,000 borrowers nationwide. Borrowers will receive notification of private loan debt cancellation from Navient, along with refunds of any payments made on the cancelled private loans, after June 30, 2021.
Source-ABC
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