The company will also pay up to $145 million in restitution.

Nationwide student loan servicer Navient has struck a deal with 39 state attorneys general to cancel student debt and pay restitution for its loan practices. The company will cancel more than $1.7 billion in student debt and pay up to $145 million direct to customers.

Navient is accused of pushing distressed borrowers into expensive repayment plans instead of income-based plans. The company is also accused of providing sub-prime funding to students for private for-profit schools with low graduation rates.

Consumers who are impacted by the settlement will be contacted directly by Navient.

Beginning in July 2022, Navient will cancel the balances on more than $1.7 billion in private education loans and pay restitution to borrowers who were placed in forbearance plans. Loans forgiven under the settlement were originated between 2002 and 2010 and have already been charged off. The settlement will impact approximately 416,000 people nationwide.

Student loan debt is something that cannot be purged through bankruptcy and affects creditworthiness, including the ability to get a home mortgage. Student loan payments were paused for all borrowers in March of 2020 through the CARES Act and will not resume until May 1, 2022.

The company has not acknowledged wrongdoing and has promised to change its policies and procedures for distressed borrowers and income-driven payment plans. Customer service representatives must offer income-driven plan estimates before placing borrowers into forbearance. They also must tell borrowers about other options of repayment, including the U.S. Department of Education’s PSLF limited waiver opportunity, a plan that offers forgiveness to people working in public sector jobs.

Navient borrowers should make sure their contact information is correct with the U.S. Department of Education by updating their account at studentaid.gov. More information about the settlement agreement with Navient is available at navientadsettlement.com.

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