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Student Loans
Finance

Navient Ordered to Cancel Student Loans

The estimated reading time for this post is 93 seconds

Student Loan Servicer Navient is required to cancel student debt for more than 66,000 student loan borrowers.  

Thirty-nine state attorneys general alleged Navient was giving out private loans to students they knew who would have difficulty paying them back.

Navient, formerly known as Sallie Mae, denied it violated any laws despite its agreement to cancel $1.85 billion worth of private student loans. In 2014 Sallie Mae split into two companies, Sallie Mae Bank and Navient.

The massive settlement amount does not seem to be a big concern to the company’s shareholders. Its shares are only down 0.74% or 74 basis points on Friday.

History of  Predatory Private Student Loans 

Over the past two decades, the average tuition and fees at private national universities have risen to 144%. In-state tuition and fees at public national universities have increased to 211%.

The sharp jump in tuition and fees has birthed a lucrative private student loan market. Navient, the nation’s largest student loan servicers, had gotten into trouble in the past regarding predatory private student loans.

In 2017, the Consumer Finance Protection Bureau (CFPB) sued the company for illegally cheating borrowers out of repayment rights. The lawsuit claimed that “ Navient systematically and illegally failing borrowers at every stage of repayment.”

Student Loan Debt Crisis

Private student debt is just the tip of the student debt crisis. More than  45 million Americans hold about $1.7 trillion in federal student debt. Student debt is making life difficult for  Baby boomers, Generation X, and  Millennials alike.

Students who attended fraudulently for-profit colleges are often left saddled with debt with worthless degrees or no degrees at all. Debt holders are postponing significant lifestyle events such as buying their first home, getting married, or starting a business to manage their debt. The government paused payments on federal student loans since the pandemic began in March 2020. The Biden Administration extended the pause on student loan repayment to May 1, 2022

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