Lender settles after lawsuit over unfair practices with student borrowers

OLYMPIA, Wash. — One of the country’s largest lenders, Navient, which was formerly Sallie Mae, has struck a deal with attorneys general to cancel nearly $2 billion in debt and pay back millions to student borrowers.

Washington Attorney General Bob Ferguson, who was the first to file a lawsuit against the lender, joined fellow attorneys general from across the country to make the announcement that Navient will be held accountable for what they called unfair practices with student borrowers.

In Washington, that means $45 million in debt relief and restitution will go to students struggling with debt.

“The bottom line is this. Navient knew that people relied on their loans to make a better life for themselves and for their children. Instead of helping them, they ran a multi-billion-dollar scam,” Pennsylvania Attorney General Josh Shapiro said.

For current and former students across Washington, time that was spent on campus has cost them well beyond what they paid in tuition. Attorneys general made it clear that former students who struggled with trying to repay loans were often steered into programs that sunk them deeper into debt, and the lender they were dealing with, Navient, was responsible.

“That’s exactly what Sallie Mae/Navient did for many years and that’s not OK, and that’s why we’re holding them accountable today,” Ferguson said Thursday.

“Navient will cancel $1.7 billion in debt for more than 66,000 people nationwide,” said Shapiro.

“In Washington state, it’s more than 10,000 Washingtonians that will benefit from this in a way similar to what Josh (Shapiro) outlined for Pennsylvania, with debt relief of about $35 million as well,” said Ferguson.

The attorneys general said Navient will start sending money to eligible students in July and that students won’t have to do anything except update their contact information on the U.S. Department of Education website.

In a statement Navient said:

“In the agreements, Navient expressly denies violating any law … 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.”

Navient said the process for debt relief and payouts will get rolling after all the final court approvals for the settlement.