Settlement over ‘predatory’ practices to erase student debt for over 1,400 Washingtonians

Jan 13, 2022, 11:22 AM | Updated: 12:31 pm
Attorney generals Josh Shapiro, Bob Ferguson, and Rob Bonta announce the $1.85 billion settlement against Navient (courtesy TVW)
(courtesy TVW)

Navient, formerly one of the nation’s largest student loan servicers, will pay $45 million in restitution to the state of Washington in a settlement with state Attorney General Bob Ferguson.

The attorney general asserts that Navient engaged in deceptive and unfair lending practices, which harmed borrowers from Washington.

Washington state, along with Illinois, were the first to obtain judgement against Navient, the attorney general’s office reports.

As part of the settlement, the student loan provider will extend $35 million in debt relief, erasing remaining debt for more than 1,400 Washingtonians who took out certain private loans between 2002 and 2014, an average of $25,000 per person.

Furthermore, they will pay $2.3 million in restitution to approximately 8,900 Washington borrowers who enrolled in forbearance for an “extended period of time” between 2009 and 2017. They are also required to pay Washington state $7 million to cover the costs associated with the attorney general’s investigation and litigation.

No action is required for those affected by the settlement. Those eligible for restitution will receive postage from the attorney general’s office “in the next few months,” a press release from Ferguson’s office reads.

“Higher education should not equal a lifelong debt sentence — and student loan corporations do not have the right to deceive Washingtonians in order to maximize their profits,” Ferguson wrote. “We are holding the country’s largest student loan servicer accountable, achieving hard-fought corporate reforms, and helping repair the damage they did to Washington borrowers. We will continue fighting to prevent the financial abuse of Washington students overburdened with debt.”

Draze: Federal student loan repayment pause is a ‘pain killer, not a treatment’

The allegations of unfair lending practices largely relate to forbearance: Ferguson states that Navient “unfairly pushed borrowers into forbearance,” forcing borrowers into accepting high interest accumulation without sufficient education of the benefits of income-driven repayment plans. When payments resumed, accumulated interest would be added to the principle, whereas income driven plans offer the possibility of loan forgiveness after 20 to 25 years of qualifying payments, which can be as low as $0 per month.

The lawsuit alleges other illegal business practices, including giving “predatory loans” to students attending for-profit colleges with low graduation rates, misapplying borrower payments, and training agents to provide misleading information related to payment schedules.

The initial lawsuits were filed in conjunction with Illinois Attorney General Kwame Raoul in January 2017, and investigations from Illinois, Pennsylvania, California, Massachusetts, Ohio and North Carolina, as well as the Consumer Financial Protection Bureau followed. Navient has agreed to pay $1.85 billion among them.

Navient, the Sallie Mae offshoot that was once the nation’s largest student loan servicer, began transferring $5.6 million in loans owned by the U.S. Department of Education to a company named Maximus, which will service the loans under the brand “AidVantage.”

“The company’s decision to resolve these matters, which were based on unfounded claims, allows us to avoid the additional burden, expense, time and distraction to prevail in court,” wrote Navient’s Chief Legal Officer Mark Heleen in a news release. “Navient is and has been continually focused on helping student loan borrowers understand and select the right payment options to fit their needs. In fact, we’ve driven up income-driven repayment plan enrollment and driven down default rates, and every year, hundreds of thousands of borrowers we support successfully pay off their student loans.”

Local News

crime, domestic violence...
Darren Dedo

Prosecutors say former boxer beats roommate to death shortly after leaving prison

A man in Kent has been charged with murder, and prosecutors say it started with a dispute over a crinkly candy wrapper.
20 hours ago
(Photo by Craig F. Walker via Getty Images)...
Frank Sumrall

Seattle Public Schools will not change start times despite growing bus driver staffing concerns

Superintendent Brent Jones has determined Seattle Public Schools (SPS) will continue the two-tier transportation system for the 2022-23 school year.
20 hours ago
Bellevue Power Line...
KIRO Newsradio staff

Power outages impact thousands across Western Washington

Thousands of people are without power in Western Washington after strong winds knocked down trees and power lines on Wednesday.
20 hours ago
Auburn Pitbull...
Darren Dedo

Video: Police shoot dog attacking a little girl in Auburn

An Auburn girl is recovering after a vicious dog attack caught on video. According to Auburn Police, officers were dispatched to the 1800 block of C Street SE for a dog attack 11-year-old victim. Officers arrived on the scene and found the girl with bites to her left arm from an attack by two pit […]
20 hours ago
Rescuers work at the site of a plane crash on March 23, 2022 in Tengxian County, Wuzhou City, Guang...
Charlie Harger

Investigators suspect the fatal Boeing 737 airplane crash in China was intentional

The Wall Street Journal reported investigators believe someone in the cockpit intentionally crashed the China Eastern Airlines jet.
20 hours ago
Tent Homeless...
MyNorthwest Staff

Edmonds doesn’t want to become next Seattle after City Council bans public camping

After weeks of delays and debates, the Edmonds City Council passed an ordinance banning camping in public spaces Tuesday evening.
20 hours ago

Sponsored Articles


Anacortes – A Must Visit Summertime Destination

While Anacortes is certainly on the way to the San Juan Islands (SJI), it is not just a destination to get to the ferry… Anacortes is a destination in and of itself!

Ready for your 2022 Alaskan Adventure with Celebrity Cruises?

Celebrity Cruises SPONSORED — A round-trip Alaska cruise from Seattle is an amazing treat for you and a loved one. Not only are you able to see and explore some of the most incredible and visually appealing natural sights on the planet, but you’re also able to relax and re-energize while aboard a luxury cruise […]

Compassion International Is Determined to ‘Fill’ a Unique Type of Football ‘Stadium’

Compassion International SPONSORED — During this fall’s football season—and as the pandemic continues to impact the entire globe—one organization has been urging caring individuals to help it “fill” a unique type of “stadium” in order to make a lasting difference in the lives of many. Compassion International’s distinctive Fill the Stadium (FtS, fillthestadium.com) initiative provides […]

What are the Strongest, Greenest, Best Windows?

Lake Washington Windows & Doors SPONSORED — Fiberglass windows are an excellent choice for window replacement due to their fundamental strength and durability. There is no other type of window that lasts as long as fiberglass; so why go with anything else? Fiberglass windows are 8x stronger than vinyl, lower maintenance than wood, more thermally […]

COVID Vaccine is a Game-Changer for Keeping our Kids Healthy

Snohomish Health District SPONSORED — Cheers to the parents and guardians who keep their kids safe and healthy. The dad who cooks a meal with something green in it, even though he’s tired and drive-thru burgers were tempting. The mom who calms down the little one who loudly and resolutely does NOT want to brush […]
Experience Anacortes

Coastal Christmas Celebration Week in Anacortes

With minimal travel time required and every activity under the sun, Anacortes is the perfect vacation spot for all ages.
Settlement over ‘predatory’ practices to erase student debt for over 1,400 Washingtonians