On January 13, 2022 Thirty-nine state attorneys general announced that Student Loan Servicer Navient will provide relief to student loan borrowers and state attorneys general, including Washington State, in the amount of approximately 1.85 billion. I had the chance to talk about the Navient Student Loan Discharge settlement case and requirement to be eligible for student loan discharge on 1150am KKNW and you can listen to the discussion here:
Most of the information found in this article comes from the National Consumer Law Center’s article found here where you can read about the Navient student loan settlement in full detail. The settlement resolves lawsuits by State Attorneys General over allegations of Navient’s unfair and deceptive federal student loan servicing practices and abuses in its origination of predatory private student loans as well as Navient’s failure to help borrowers find their best repayment options, and instead pushing them towards long term forbearance rather than an income-based repayment plan that come with a discharge if borrowers stick with the plan. Forbearance on the other hand can cause borrowers to incur significant interest with no discharge of loans for on time payments.
What is Navient Required to do as Part of the Student Loan Discharge Settlement?
Navient will be required to discharge private student loans and provide restitution to certain federal student loan borrowers and requires Navient to notify borrowers about a new right that temporarily offers qualifying public service workers the chance to have previously nonqualifying repayment periods counted towards loan forgiveness.
Navient will discharge the remaining balance on more than 55,000 private Sallie Mae or SLM student loans with an average of $25,000 per borrower. Borrowers don’t need to take any action but will not notified by July 2022 that their loans will be discharged.
The settlement also requires Navient to place 95 million in a consumer fund to be distributed by independent oversight committee with the expectation that about 360,000 federal student loan borrowers will each receive a $260 check, expected to be sent out by mid 2022.
What Student Loans Qualify for discharge under the Navient Settlement?
To qualify for discharge under the Navient settlement, a private student loan must have been originated between 2002 and 2014 by Sallie Mae (SLM Corp.) and must have been charged off by Navient as of June 30, 2021. Additionally, the loan must meet one of three conditions.
- The borrower at loan origination had a FICO score below 670 and attended a for-profit school or below 640 and attended a non-profit or public school
- The loan was used to attend of the for-profit schools included here under #6.
- The loan originated under Sallie Mae’s opportunity or Recourse program.
The settlement excludes loans from discharge where the borrower’s mailing address on file with Navient as of June 30, 2021, was in Alabama, Alaska, Idaho, Montana, New Hampshire, North Dakota, Oklahoma, South Dakota, Texas, Utah, or Wyoming. Also excluded are loans, as of June 30, 2021, that were both charged off prior to June 30, 2014, and are beyond the statute of limitations in the state of the borrowers’ mailing address on file with Navient for Navient to sue on that loan.
What Should I Do with regards to My Student Loans Moving Forward?
If you qualify for a student loan discharge then you should not take any further action or make any further payments. If you do not meet the requirements then it may be advisable to get on an income based repayment plan to keep your student loans under control and continue to be eligible for future discharge options.
What About Student Loan Forbearance?
On December 22, 2021, President Biden extended the Student Loan Forbearance. Student loan forbearance has been extended through May 1, 2022. During this time, federal student loans will have a 0% interest rate and payments will not be due if the loan is placed in forbearance.
If you live in Washington State and are looking to determine what Student Loan program works best for you, give Symmes Law Group a call at 206-745-3542 or contact us to get a complete Student loan analysis to get you into the right student loan plan for you in which Symmes Law Group offers on a flat fee basis for review.