Navient will cancel $ 1.7BN in student loans as part of the settlement Debt News

Navient Student Loan Service of the United States reached an agreement with 39 states to pay $ 1.85 million to settle predatory loan claims.

Navient Corp. reached an agreement with 39 states to pay $ 1.850 billion and cancel nearly 70,000 student loans to resolve claims that the company was using pre-emptive lending practices.

Most of the liquidation value comes from the cancellation of $ 1.7 billion in loans since 2002, according to statements by the company and the state’s attorney general. State officials said Naviente had promised to help them find cheap plans to repay the struggling loans, but instead focused them on expensive long-term payments.

“The bottom line is this: Naviente knew people were relying on their loans for a better life for themselves and their children,” Pennsylvania Attorney General Josh Shapiro said at a news conference Thursday. “Instead of helping them, they cheated millions.”

Navient was previously reported to have been investigated by the U.S. Consumer Financial Protection Office, as well as the opening of settlement talks. An analysis by Bloomberg Intelligence in December estimated that the company’s financial exposure was more than $ 500 million. Shares rose in the news, but changed little at noon on Thursday.

Navient, in Wilmington, Delaware, manages approximately one-quarter of the nation’s student loans. Sallie Mae was formed in 2014 in a spin-off of a US-backed creative loan.

Lending services, like mortgage services, play an important role in the student debt system, which is made up of government loans and private loans. As a server, Navient sends monthly invoices to lenders, charges payments, and advises on repayment options.

The agreement says the company was targeting student loans to “expensive long-term lenders” rather than advising on the benefits of cheaper income plans.

When borrowers are in tolerance, their payments are repaid as interest is accrued. Payments of government loan payment plans depend on what a borrower earns and in some cases can be zero dollars. Their balances can be forgiven after a certain number of years — 20 or 25 years — or after 10 years, in the case of the Public Service Loan Forgiveness Program.

“As it stands now, nearly $ 45 million Americans owe more than $ 1.8 trillion,” Shapiro said. “By the way, I’m one of them. I’m still paying off student debt. ‘

Attorney Generals said that loans with the right to repay will be automatically received by mail.

(Updates with Navient background)