Navient Agreement with State Attorneys General
Answers about the Jan. 13, 2022 announcement:
Whose loans will be canceled under this agreement?
The agreement includes loan cancelation for approximately 66,000 borrowers who took out certain private student loans, largely between 2002 and 2010, and who subsequently defaulted and met other criteria. The vast majority of recipients borrowed prior to 2010 to attend certain for-profit schools, such as Corinthian and ITT, which closed years later once the federal government stopped lending at these schools.
How will I know if my loans will be impacted?
Once court approval is received, Navient will notify the specific borrowers and co-borrowers whose private education loans will be canceled. Borrowers and co-borrowers do not need to take any action.
How will the state attorneys general Consumer Fund work?
Some states are planning to provide payments directly to certain borrowers through a separate Consumer Fund, as determined entirely by the states. According to the states, approximately 350,000 people will receive approximately $260 each through this fund. The states will choose who will receive these funds, using criteria they have determined. Borrowers do not need to take any action. The administrator hired by the states will send a postcard to each federal loan borrower eligible for a payment, using the most current address on file with the U.S. Department of Education.
If my federal loan recently switched from Navient to Aidvantage could I still be eligible for the Consumer Fund payments?
Eligibility for a payment from the Consumer Fund is not affected by the transfer of servicing to Aidvantage. Not all federal student loan borrowers will be eligible but those who are will be notified by the administrator hired by the states.
Are there other options if I don’t qualify for help through this agreement but am struggling to make my payments?
Yes, there could be options. Federal student loans offer income-driven repayment, Public Service Loan Forgiveness, or other repayment plans. Private education loans also may have options. Student loan borrowers should contact their servicer to discuss.
We're committed to providing you the best service possible as you continue down the path of loan repayment, and do not expect these legal matters to impact our ability to serve you in any way.
ANSWERS FOR OUR STUDENT LOAN CUSTOMERS
We created this page to help clear up any confusion you might have about the lawsuits Navient was named in.
Navient services one or more of my student loans. How do these lawsuits affect me?
The terms of your loans remain the same. You should continue making payments on your loans as usual. As always, we remain available to help you online, by email, and by phone.
How is Navient responding to these allegations, and what happens next with the lawsuits?
Plainly stated, these allegations are unfounded. Our core goal remains the same: to help our customers achieve financial success. You can continue to contact us and access our resources, just as you always have.
How can I learn more about Income-Driven Repayment (IDR) plans?
Income-Driven Repayment plans are available to qualifying borrowers with federal student loans. These repayment plans can be a valuable option for those with high debt relative to their current income.
Keep in mind that stretching out payments over a longer period of time may cost more over the life of the loan. The good news is that you can make extra payments to pay off your loans earlier or change to another repayment plan.
After making qualifying payments for 20 to 25 years, you may be eligible for loan forgiveness of any remaining balance. Direct Loan borrowers working in public service may be eligible for loan forgiveness after 10 years of making qualifying payments. (Note: If you have an older federal loan, made under the FFELP program, you can consolidate your FFELP loan into a Direct Loan, known as a Direct Consolidation Loan. Consolidation into the Direct Loan program may allow you to take advantage of payment plans or forgiveness options created solely for Direct Loans. You will need to weigh the advantages and disadvantages before you take this action.)
FACT: Half of student loan balances serviced by Navient for the federal government are enrolled in IDR plans.
Why is forbearance used when enrolling in Income-Driven Repayment?
Forbearance is often a required tool to help borrowers enroll in federal IDR plans.
FACT: Nearly 70% of borrowers in IDR plans needed forbearance for one of two reasons:
- Past-due borrowers cannot enroll in IDR unless they bring their account current. Doing so typically requires forbearance to cure the delinquency.
- Borrowers may need forbearance during the time it takes to gather the required documentation and complete the federal IDR application without becoming past due.
Is my credit going to be affected?
No. It is important to understand how student loans can affect your credit score.
FACT: The Fair Credit Reporting Act requires that reported information, such as missed payments, must be accurate.
FACT: Student loan servicers are required to report federal student loan payment status to the credit reporting agencies.
A federal student loan delinquency is usually reported to the credit reporting agencies after a payment has been past due for 90 days. Private student loan reporting sometimes occurs earlier, such as after payment has been past due for 45 days.
Are private loans affected?
The terms on all loans remain the same. The private loans referenced in the suits pertain to a specific subset of private education loans made many years ago.
As a reminder, Navient separated from Sallie Mae in 2014.
FACT: Private education loans are not eligible for the federal government-sponsored benefits such as Income-Driven Repayment plans.
Navient is committed to working with private education loan customers and their cosigners who may be facing financial difficulty to identify repayment options based on their individual circumstances.
FACTS ABOUT NAVIENT NEWS
We’ve summarized the allegations below and included our perspective on each one. In short, we believe the allegations by the Consumer Financial Protection Bureau (CFPB), and the state attorneys general who have filed suits against us are unfounded.
Allegation: Navient didn’t do enough to get borrowers with federal loans into Income-Driven Repayment (IDR) plans and steered borrowers into forbearance instead.
FACTS: Navient is a leader in enrolling eligible borrowers into Income-Driven Repayment programs.
We promote repayment options, including IDR, in 154 million communications annually.
And it’s working: Half of federal student loan balances serviced by Navient are enrolled in Income-Driven Repayment.
Allegation: Navient didn’t do enough to help borrowers with federal loans to complete reenrollment so they could stay enrolled in Income-Driven Repayment plans.
FACTS: Under U.S. Department of Education regulations, borrowers must reenroll annually in Income-Driven Repayment plans by submitting updated information about their income and family size.
This is not a requirement set by Navient.
Navient goes above and beyond U.S. Department of Education requirements to help borrowers complete government-mandated annual IDR reenrollment requirements.
Further, Navient has promoted to Congress and others solutions that greatly simplify the Income-Driven Repayment plan renewal process and allow borrowers to apply for these plans for more than a year at a time.
Allegation: Navient reported some federal loans incorrectly to the consumer credit bureaus.
FACTS: Navient’s credit bureau reporting practices have been and continue to be consistent with Consumer Data Industry Association (CDIA) guidance.
This group’s members include the national credit reporting agencies. Navient followed these guidelines.
The impact described in the CFPB lawsuit refers to how a third-party, proprietary credit scoring firm may have interpreted a neutral factor on certain borrowers, something that the CDIA did not foresee.
Allegation: Navient made certain private education loans to borrowers who it should have known were not able to repay them.
FACTS: Private education loans were made to students attending schools also eligible for federal grants and student loans.
All student loans, federal and private, are made with the expectation that borrowers will graduate and obtain employment.
Consumer credit default rates skyrocketed during the Great Recession, as a result of high unemployment and macroeconomic conditions. Federal and private loans were no different.
The vast majority of our private education loan customers are successfully repaying their loans and in fact delinquency and default rates are among historic lows.
Navient conducts its businesses through various members of the Navient family of companies.
"The customer service representative was very helpful to me with this process she gave me all my options that were available to me, and the income-driven repayment program is the best."
"Don't be afraid to seek help through repayment programs. I struggled with paying loans when I first graduated because of the entry level position I had obtained. Instead of seeking a payment program, I simply did not pay the loan. It ruined my credit and took years to dig myself out. If I would have sought out repayment programs, I could have saved myself late fees and bad credit.
I always do a review of net income and bills twice a year. When teacher wages were frozen, I knew to look for repayment plans that would fit my budget.
As a single income household, I knew I would need help to repay my loan. I spoke with a representative and discovered that this program would be my best fit. Once my income increase, I can increase the amount that I pay on the loan."
"Navient has allowed me to pay a very low payment, which helps me repay my debts but not stopping my growth as an adult. For example, buying a house, expanding our family, etc. All things that cost extra money and also take discipline in saving for. Paying on a Income Driven repayment option allows me to pay what I can truly afford, and not stop me from growing as a individual in today's society."
"Essentially whittling down payments worked best for me. I'd pay some here and some there, always paying a little more than the minimum balance. Navient.com made it easy for me to maintain my student loan balance and made my life a whole lot simpler!"
"I would urge college students to only borrow what they need. I would suggest that new grads make a budget that they can stick to. If they find that their loan payments cannot fit into that budget, they should immediately seek assistance from Navient to find a payment plan that works for their budget."
"Thanks to Navient's repayment options it made it easy to still enjoy the financial stability my degree gave me while still being able to afford to pay the student loans that financed my education."
"I was happy to set up monthly automatic debit payments, so I didn't have to think about making my payments. At an especially difficult time, I requested a deferment for a few months, and received it. I was able to get back on track and pay my monthly payments. Thank you to Navient for being flexible and helping those of us who need help."