Student loan lender Navient has agreed to pay $1.85 billion as part of a lawsuit settlement, which claimed they acted in a predatory manner.
The lawsuit, which stretched over 39 states, claims that the company’s goal was to put private loans on the backs of specific students who were incapable of paying them back. Many of these students attended for-profit colleges with low graduation and employment rates.
Under Navient’s settlement, the company will pay $95 million in restitution to about 350,000 federal student loan borrowers who were placed in long-term forbearance. Those people will receive about $260 each. Additionally, the company will cancel $1.7 billion of private student loan debt for roughly 66,000 people. The majority of these loans were made between 2002 and 2010.
Navient has maintained its innocence, calling the claims “unfounded.” Nevertheless, the company’s chief legal officer, Mark Heleen, said the decision to settle the case was a way to “avoid the additional burden, expense, time, and distraction.”
According to Pennsylvania Attorney General Josh Shapiro, the firm was well aware of what they were doing and willingly put profits ahead of borrowers.