Deadline Detroit | Predatory practices settlement cancels student loans for 1,576 people in Michigan
Under a multistate legal agreement, nearly 1,600 student borrowers in Michigan can stop paying what they owe to a Delaware lender and a debt management company named Navient.
Michigan and 37 other states, as well as the District of Columbia, have accused the loan servicing firm of harmful practices, such as steering former students away from income-based repayment plans and into a long-term alternative that has pushed some into deeper debt. Navient also allegedly gave dodgy private loans to students at for-profit colleges and schools with low graduation rates.
“The predatory practices employed by Navient exploited students who wanted nothing more than an education,” Michigan Attorney General Dana Nessel said in a statement about the five-year-old case that was resolved last week.
“The company placed borrowers in risky subprime loans, forcing them to take on debt they could never repay. This settlement reflects the responsibility of affected borrowers across the country.”
The company will forgive remaining balances on $1.7 billion in subprime private student loans issued between 2002 and 2010 to more than 66,000 borrowers nationwide, including 1,576 in Michigan. Many had been in default, unable to meet payments.
It will also send about $260 to each of the roughly 350,000 federal borrowers who had been placed in extended repayment plans that increased interest charges.
Borrowers who qualify for federal debt cancellation or restitution will receive a postcard from a settlement administrator this spring, followed by a check in mid-2022. Those whose private loans are canceled will be contacted in writing by July.
Student Loan Forgiveness is tax exempt under the White House 2021 Coronavirus Stimulus Package.
For its part, the firm publishes: “Although these allegations are false and baseless and we strongly believe that we would win in court, we have decided to resolve these issues to avoid the continued burden, expense and distraction of litigation. of state.”