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NY student loan borrowers to benefit from major Navient settlement

A black graduation cap with a gold tassle atop a pile of $500 dollar bills.
File Photo

New York student loan borrowers will benefit from a settlement announced Thursday between 39 state attorneys general and the loan servicing giant Navient.

Navient, one of the nation's largest student loan servicers, has agreed to cancel $1.7 billion in student loan debts owed by roughly 66,000 borrowers and pay $95 million in restitution — or about $260 each — to 350,000 borrowers nationwide.

New York Attorney General Tish James said$6.8 million in restitution will be paid to 25,000 federal loan borrowers in the state, about 4,300 borrowers will receive over $110 million in private loan debt cancellation and New York will receive almost $1.2 million in cash.

She said it also requires Navient to notify borrowers about the U.S. Department of Education’s recently announced PSLF limited waiver opportunity, "which temporarily offers qualifying public service workers the chance to have previously nonqualifying repayment periods counted toward loan forgiveness.

“For too long, Navient contributed to the national student debt crisis by deceptively trapping thousands of students into more debt,” James said. “Today’s billion-dollar agreement will bring relief to thousands of borrowers in New York and across the nation and help them get back on their feet. Navient will no longer be able to line its pockets at the expense of students who are trying to earn a college degree."

The settlement ends a years-long legal fight with states in which Navient faced two serious allegations.

The company was accused of steering student borrowers into expensive forbearances instead of more flexible, income-driven repayment plans. It also faced allegations that its predecessor, Sallie Mae, had made subprime private loans to vulnerable borrowers who it knew were likely to default.

NPR's Corey Turner contributed to this story.