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What you need to know about the Navient student loan settlement: Legally Speaking with Stephanie Haney

3News legal analyst Stephanie Haney breaks down which Ohioans will get their private Navient student loans canceled, and which ones will only get a $260 payment
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3News legal analyst Stephanie Haney breaks down which Ohioans will get their private Navient student loans canceled, and which ones will only get a $260 payment, in Legally Speaking on February 1, 2022.

CLEVELAND — Legal analysis: While debate continues over whether President Joe Biden will (or can) keep his campaign promise to cancel big chunks of federal student loan debt for struggling Americans, relief is coming for certain borrowers who hold Navient federal and private student loans. 

Legally speaking, Navient is accused of engaging in unfair and deceptive practices when it comes to servicing student loans, resulting in a lawsuit that was recently settled to the benefit of hundreds of thousands of borrowers.

Ohio is one of 39 states, plus Washington, D.C. which filed court documents saying the company convinced people with federal student loans to choose repayment options that ended up costing them a lot more money in the long run. The loan servicer has also been called out for allowing students at for-profit schools to take out risky private loans that they were very likely never going to be able to pay back, in an effort to get those same for-profit schools to consider it a preferred lender for more attractive federal loans.  

Navient, which is one of the country's largest student loan providers, didn’t admit to any of this (which is common in large settlements like this one), but has agreed to pay a lot of money and cancel a lot of this debt to avoid going to court and chancing an official determination of liability.

People with those risky, subprime private loans who ended up missing payments will get those loans completely canceled. Across the US, that amounts to $1.7 billion in forgiven debt for 66,000 people. About $82 million of that belongs to around 3,500 Ohioans who are about to get a nice break in the student loan department. 

The Ohioans who qualify for the cancellation, for the most part, include borrowers who had low credit scores when they took out private subprime student loans through Navient’s predecessor, Sallie Mae, between 2002 and 2014, and then had more than seven consecutive months of late or missed payments prior to June 30, 2021.  

Certain other, non-subprime private student loans to be canceled include those made by Sallie Mae Bank and certain other lenders between 2002 and 2014 for borrowers to attend specific for-profit schools that have been subject to state or federal law enforcement actions.

If you have federal student loans with Navient, don’t expect a big payout, but nationwide the company will have to pay about $95 million in restitution to 350,000 people. Almost 20,000 of those people are here in Ohio. People with these loans will get a check for around $260 each. 

Courts in every place where Navient was sued need to individually approve these settlement numbers. In Ohio, Judge Mark A. Serrott with the Franklin County Court of Common Pleas signed off on the settlement on January 24. (You can read the consent judgment order here.) 

With the order now entered to approve the settlement, people who qualify to get their private loans canceled will get a notice by July. These same people also qualify for reimbursement for any payments made after June 30, 2021. Those people don’t have to do anything. The company knows who you are and they’ll reach out to you.  

People with federal loans who were placed into certain long-term forbearance repayment plans that ended up costing them extra money in interest and fees are the ones who will be getting that $260 check. To be eligible for this payment, borrowers must have entered repayment on their federal student loans before 2015, have been eligible for an income-driven repayment plan but instead gotten guided to entering forbearance over the phone by a Navient employee, and have kept that forbearance in place for at least two years. 

If you qualify for one of these payments, the only thing you need to do at this time is make sure that your address is up to date with Studentaid.gov, and you will hear from Navient in the spring. 

(Moving forward, Navient must also explain the benefits of income-driven repayment plans and offer estimated income-driven payment amounts before placing borrowers into optional forbearances where payments are paused but interest still accrues.) 

In addition to these payments, Navient must pay $142.5 million to the attorneys general who filed the initial lawsuit and is required to reform its lending practices. For more on those reforms, check out the Ohio Attorney General’s website, here. 

Stephanie Haney is licensed to practice law in both Ohio and California.

The information in this article is provided for general informational purposes only. None of the information in this article is offered, nor should it be construed, as legal advice on any matter.

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