Over $57M in NJ student loan debt canceled in Navient settlement
New Jersey student loan borrowers are in line to receive over $60 million in relief from a settlement with Navient Corp., Acting Attorney General Andrew Bruck and the state Division of Consumer Affairs announced on Thursday.
The $57.2 million in debt relief and $3.1 million in restitution payments to New Jersey borrowers — plus $3 million payment to the state — is part of a $1.85 billion nationwide settlement.
It resolves a 2020 lawsuit filed against the student loan servicing giant and its subsidiary, Navient Solutions for alleged predatory behavior.
The state had accused Navient of deceptive conduct, unconscionable commercial practices and misrepresentation in servicing thousands of New Jersey consumers’ student loans over a decade.
Debt cancellation will benefit about 2,040 New Jersey borrowers, while another 11,522 New Jersey borrowers will receive restitution payments of roughly $260 each, under terms of the settlement, pending court approval.
Nationwide, Navient will cancel more than $1.7 billion in subprime private student loans owed by about 66,000 borrowers, while also paying $95 million in restitution to about 350,000 consumers.
Navient, formerly known as Sallie Mae, was one of the nation’s largest servicers of both federal and private student loans, until partially exiting the business in September 2021.
In the settlement, Navient expressly denies violating any law, including consumer-protection laws, or causing borrower harm, according to the company's own written release.
Who's getting payments
Consumers do not need to take any action to receive the benefits.
Anyone receiving private loan debt cancellation will be notified by Navient, and they will also be refunded any payments made after June of last year.
Navient said the loan debt to be canceled would be among "certain qualifying private education loans that were originated largely between 2002 and 2010 and later defaulted and charged off," according to its own release on Wednesday.
Those eligible for restitution payment will automatically receive a check from the Attorney General’s settlement administrator, later this year.
Federal loan borrowers who may be eligible are urged to update contact information in their online account.
Additional information is at the settlement website.
“Too many New Jerseyans have struggled to pay off their student loans,” Bruck said in a written statement. “And too many of those borrowers have had a harder time because their student loan servicer put corporate profits above their best interests.”
More than 44 million people across the country have taken out student loans, as the average cost of tuition and expenses from a four-year college or university rosen about eight times as fast as the average wage, between 1986 and 2016.
Total student loan debt is now estimated at more than $1.75 trillion nationwide.
The average New Jersey borrower carries $35,730 in student debt, according to the state attorney general’s office, among the highest in the country.
“With today’s settlement, we are holding one of the country’s largest student loan servicers accountable, and we are putting millions of dollars back in our residents’ pockets,” Bruck said.