HONOLULU (KHON2) — The Hawai’i Attorney General Holly Shikada announced on Tuesday that one of the nation’s largest student loan servicers, Navient, will be providing relief of $367,867 in restitution payments for 1,380 federal loan borrowers in Hawaii.
In Addition, 196 Hawaii borrowers will receive a total of more than $4.3 million in private loan debt cancellation, Shikada said.
Student loan borrowers should have the option to receive counseling about income-driven repayment,” said Attorney General Shikada. “This settlement ensures counseling will occur before student loan borrowers are forced to accept costly long-term forbearances, which can lead to dire financial and personal consequences.”
Since 2009, a group of 39 attorneys general across the nation has been working together to resolve claims that Navient “steered struggling student loan borrowers into costly long-term forbearances instead of counseling them about the benefits of more affordable income-driven repayment plans.
Shikada was one of the attorneys general that filed the settlement as a proposed Consent Judgment and Complaint in the Circuit Court of the First Circuit, however, the settlement will require court approval before any payments can be made.
According to Shikada, Navient also allegedly originated predatory subprime private loans to students attending for-profit schools and colleges with low graduation rates, even though it knew that a very high percentage of such borrowers would be unable to repay the loans.
Shikada said, under the terms of the settlement, Navient will cancel the remaining balance on $1.7 billion in subprime private student loan balances owed by more than 66,000 borrowers nationwide. In addition, Navient will pay $142.5 million to the attorney generals.
Out of the $1.85 billion that Navient will be providing, a total of 350,000 federal loan borrowers who were placed in some type of long-term forbearances will receive a restitution payment in the amount of $260.
The settlement also has a condition which states Navient has to explain the benefits of income-driven repayment plans and offer an estimated income-driven payment amount before placing borrowers into optional forbearances.
According to Shikada, borrowers receiving private loan debt cancellation will receive a notice from Navient by July of this year, with refunds of any payments made on the canceled private loans after June 30, 2021. And those who qualify for a restitution payment of approximately $260 will receive a postcard in the mail by Spring.
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Federal loan borrowers who qualify for relief under this settlement do not need to take any action except update or create their studentaid.gov account to ensure that the U.S. Department of Education has their current address.
For more information go to, www.NavientAGSettlement.com.