D.C. — Student loan processor Navient is set to cancel nearly $2 billion in debt in an agreement with 40 state attorneys general as the Wall Street Journal reports.
Navient is one of the largest student loan processors in the U.S., and the settlement will cancel the debt of 66,000 borrowers bringing the total to $1.7 billion, according to WSJ.
As the New York Times reports, the deal also forces Navient to settle claims totaling $1.85 billion with 39 states to settle predatory student loan claims for borrowers who were said to be highly unlikely to be able to pay back the debt.
Josh Shapiro, attorney general for the state of Pennsylvania said, “Navient repeatedly and deliberately put profits ahead of its borrowers — it engaged in deceptive and abusive practices, targeted students who it knew would struggle to pay loans back, and placed an unfair burden on people trying to improve their lives through education.”
Navient did not admit fault in the settlement and maintained that the company did not act illegally. As the Wall Street Journal pointed out, the loans related to the settlement are private loans and are not guaranteed by the federal government.
Navient will be required to make a one-time payment of about $145 million to the states involved, as part of the settlement agreement.
An announcement from the office of Pennsylvania Attorney General Josh Shapiro lists the states which co-led in the negotiation of the settlement including Washington, Illinois, Massachusetts, and California.
Other states' attorneys general joined the negotiations, including those from Arizona, Arkansas, Colorado, Connecticut, the District of Columbia, Delaware, Florida, Georgia, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia and Wisconsin.
In early January it was announced that Navent would no longer be servicing student loans, and the company said that no payments are required during the COVID-19 forbearance period which is said to last until May.