Navient, one of the largest student loan servicers in the U.S., is confronting major legal challenges in 2023 through class action lawsuits and investigations alleging predatory lending and servicing misconduct. As borrowers and regulators take action, the future of the controversial company remains uncertain.
$1.85B Settlement Reached in State Lawsuit on Navient
Earlier in January 2023, Navient agreed to a $1.85 billion settlement to resolve a lawsuit led by more than 35 states and the District of Columbia. The suit accused Navient of steering federal borrowers into costly forbearances instead of income-driven repayment plans. Additionally, it alleged Navient issued predatory subprime private loans that had a high risk of default.
Under the settlement terms, Navient will provide $260 restitution payments to 350,000 federal borrowers along with $1.7 billion in private loan debt cancellation for 66,000 borrowers nationwide. While a major development, advocates argue the settlement is small compared to the $1.6 trillion student debt crisis.
New $16M Settlement Over Bankruptcy Discharges
In a separate class action lawsuit, Navient agreed to pay $16 million in October 2023 to settle allegations it failed to properly discharge student loans during bankruptcy. The settlement benefits borrowers who filed bankruptcy after October 2005 but did not get their private Navient loans canceled as expected.
Eligible borrowers can submit claims for compensation by November 2023. Navient also agreed to forgive $182 million in outstanding loan balances as part of the deal. However, some argue the settlement should have wiped out more debt.
How to Receive Navient’s Settlement Payment
To receive compensation from the $16 million Navient bankruptcy settlement, eligible borrowers must submit a valid claim form by November 20, 2023.
The settlement benefits borrowers who:
- Had a Navient private student loan
- Filed for bankruptcy after October 17, 2005
- Did not reaffirm the Navient private student loan
Submitting a Claim
To file a claim, borrowers can visit the settlement website and submit an online form. Mailed paper claim forms must be postmarked by November 20, 2023.
Settlement Website: https://secure.navientstudentloansettlement.com
Borrowers can receive 20% to 100% of the damages suffered from their loans not being properly discharged. Navient is also forgiving $182.4 million in outstanding loan balances.
|Case Name:||Youssef v. Navient Solutions LLC, et al., Adv. Pro. No. 17-1085, U.S. Bankruptcy Court, Eastern District of New York|
|Claim Deadline:||November 20, 2023|
|Claims Administrator:||Youssef v Navient Solutions LLC (c/o- JND Legal Administration)|
|Class Counsel:||Boies Schiller Flexner LLP, Fishman Haygood LLP, Jones swanson huddell LLC, law offices of joshua b. Kons LLC|
|Defense Counsel:||McGuireWoods LLP|
|Final Hearing:||December 13, 2023|
By submitting a claim form, affected borrowers can receive compensation and debt relief from this class action settlement.
Class Action Lawsuits Against Navient Claim Deceptive Credit Reporting
Multiple lawsuits in 2023 have also accused Navient and other loan servicers of illegally reporting paid-off loans as past due on credit reports. One suit claims Navient continued damaging borrowers’ credit after their loans were discharged in bankruptcy.
The lawsuits argue these false credit reporting practices made it difficult for borrowers to obtain mortgages, credit cards, and other financing. Settlements are still pending but could rectify credit report errors affecting thousands.
Navient Borrowers Express Frustration But See Progress
Current and former Navient borrowers have expressed frustration over the company’s alleged actions but are hopeful the lawsuits will spur positive change.
“It’s outrageous a company could get away with things like this for so long,” said Sara T., 37, whose credit score was damaged.
DeAndre H., 29, is eagerly awaiting nearly $20,000 in private loan cancellation from the state settlement. “It doesn’t fix everything but it’s a start,” he said.
While the scale of harm warrants concern, the lawsuits represent long-awaited accountability. By demanding change, both individual citizens and state authorities have made progress in protecting borrowers and reforming unethical industry practices. Though Navient continues to deny wrongdoing, legal actions in 2023 could deter future misconduct while helping over 400,000 borrowers move forward.
Disclaimer: This article is provided for informational purposes only and should not be construed as legal advice on any subject matter. Any information provided does not create an attorney-client relationship with the reader. Those seeking legal assistance regarding any issues discussed here are advised to consult with a licensed attorney in their jurisdiction.