PHOENIX — Officials in Arizona said Navient, a major student loan service company, will offer the state $54 million in debt relief as part of a nationwide settlement to resolve allegations of abusive practices.
Navient announced Thursday it would pay $1.85 billion to settle complaints filed by 39 state attorneys general.
The company was accused of steering struggling loan borrowers into costly long-term forbearances instead of counseling them about the benefits of more affordable income-driven repayment plans.
These practices allegedly pushed some borrowers further into debt, when they could have had the opportunity to possibly reduce their monthly payments.
Navient said it did not act illegally and it did not admit fault in the settlement.
As part of the settlement plan, 2,206 Arizona consumers will receive over $54 million in debt relief and 12,419 Arizona consumers will receive over $3.3 million in restitution.
“It’s disappointing how Navient took advantage of distressed loan borrowers who were simply trying to get an education to better their lives,” said Arizona Attorney General Mark Brnovich in a statement.
The settlement includes conduct reforms that require Navient to explain the benefits of income-driven repayment plans and inform borrowers of the government's Public Service Loan Forgiveness program.
“I hope these settlement dollars will go towards making it right for them and also send a strong message to any other loan servicers that if you take advantage of consumers, you will be held accountable,” Brnovich added.
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