Frequently Asked Questions About the Navient Settlement (2024)

Navient is a company that services federal and private student loans. Until recently, Navient had a contract to service federal student loans owned by the U.S. Department of Education, including a large number of loans made under the Direct Loan Program and a smaller number of loans made under the Federal Family Education Loan (FFEL) Program. On October 20, 2021, the U.S. Department of Education announced the transfer of this contract from Navient to Aidvantage, a division of Maximus Federal Services, Inc. However, Navient will continue to service federal student loans made under the FFEL Program that are owned by private lenders as well as non-federal private student loans.

Navient was created in 2014, when the company then known as Sallie Mae (formally, SLM Corporation), separated its loan servicing and recovery business from its consumer banking business. After the separation, the company’s loan servicing and collection operations were re-branded as Navient, and the consumer banking business continued under the Sallie Mae brand.

The Massachusetts Attorney General and other state Attorneys General filed lawsuits against Navient alleging that the company and its subsidiaries violated consumer protection laws by engaging in unfair and deceptive servicing and collection practices and, as Sallie Mae, originating predatory subprime private student loans. Among other things, the Attorneys General have alleged that:

• Despite promising to help borrowers find the best repayment options to minimize interest costs, Navient deceptively steered distressed federal loan borrowers into costly long-term forbearances instead of informing them about the benefits of income-driven repayment plans. Interest that accrued during these forbearances was added to borrowers’ loan balances, pushing borrowers deeper into debt.
• While operating as Sallie Mae, Navient made predatory subprime loans to students attending for-profit schools and colleges with low graduation rates even though it knew that borrowers would be unable to repay the loans. Navient made these risky private loans as an inducement to get schools and colleges to use Navient as a preferred lender for highly profitable federal loans.
• Navient engaged in a variety of other unfair and deceptive servicing practices, including failing to follow borrower instructions concerning allocation of payments, asking delinquent borrowers to pay more than the amount necessary to bring their accounts current, and promoting “cosigner release” benefits for private loans while implementing requirements designed to ensure that very few co-signers were ever released.

Under the settlement, $95 million that Navient has agreed to pay to the States will be used as restitution to compensate federal loan borrowers who were placed in certain types of long-term forbearances. Navient has also agreed to provide debt cancellation to certain private loan borrowers, and to reform its loan-servicing practices.

• Federal Loan Forbearance Steering Restitution.Qualifying federal loan borrowers who were residents of Massachusetts or one of the following states or had an address with a military postal code as of January 2017 will be issued a check in the amount of approximately $260. The restitution-participating states are: AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, IL, IN, KY, LA, MA, MD, ME, MN, MO, NC, NE, NJ, NM, NV, NY, OH, OR, PA, TN, VA, WA, and WI.
• Cancellation of Certain Private Loans. Certain private loan borrowers will receive a notice from Navient that their qualifying private loan has been cancelled, and that the credit bureaus will be alerted to remove the loan’s tradeline. (A tradeline is information about a consumer account that is sent to credit bureaus. Tradelines contain data such as the account balance, payment history, and the status of the account, e.g., current, past due, or charged-off). To be potentially eligible for debt relief, the borrower’s mailing address on file with Navient as of June 30, 2021, must be within Massachusetts or one of the restitution-participating states listed above, or in Arkansas, Kansas, Michigan, Rhode Island, South Carolina, West Virginia, Vermont, or associated with a military address postal code.
• Conduct Reform.The settlement requires Navient to reform its conduct and cease unfair and deceptive practices in servicing and collecting student loans. It includes terms designed to ensure that Navient improves its servicing and debt collection operations. A summary of some of the key reforms are listed here.

Generally, federal loan borrowers are eligible for forbearance steering restitution if they:

• Resided in Massachusetts or another restitution-participating state and were serviced by Navient as of January 2017;
• Entered repayment on a Direct or FFEL Program loan before January 2015;
• Had at least one federal loan that was eligible for income-driven repayment;
• Had at least two years of consecutive verbal or administrative forbearance between October 2009 and January 2017, where at least one of the forbearances was entered through a phone call, and where at least half of the forbearance time was prospective (i.e., not used to bring a past-due loan current); and
• Did not enroll in income-driven repayment before the forbearance period.

Eligibility for a forbearance steering payment is not affected by the transfer of servicing to Aidvantage.

The private loan debt relief will primarily go to borrowers who took out private subprime student loans (made to borrowers with low credit scores) through Navient’s predecessor, Sallie Mae, between 2002 and 2014, and then had more than seven consecutive months of delinquent payments prior to June 30, 2021.

The debt relief also includes certain other, non-subprime private student loans made by Sallie Mae Bank and certain other lendersbetween 2002 and 2014for borrowers to attend specific for-profit schools that have been subject to state or federal law enforcement actions. A list of these for-profit schools is shown in the table below.

• In many cases, large numbers of federal borrowers who attended these schools have sought cancellation of their federal student loans by filing Borrower Defense to Loan Repayment Applications alleging school misconduct.

To be potentially eligible for private loan debt relief under the settlement, the loan must have been in past due status for more than seven consecutive months prior to June 30, 2021.

Generally, only loans that were within a statute of limitations period or still credit-reporting as of June 30, 2021 are within the scope of the debt relief.

To potentially qualify for private debt relief, the borrower’s mailing address on file with Navient as of June 30, 2021, must be within Massachusetts or one of the restitution-participating states listed above, or Arkansas, Kansas, Michigan, Rhode Island, South Carolina, West Virginia, Vermont or associated with a military address postal code.

Some borrowers might be eligible to receive both private loan debt relief and a federal loan forbearance steering restitution payment.

No. Restitution payments will be automatically distributed to eligible federal loan borrowers by the settlement administrator, Rust Consulting. If you are eligible for a payment, you will receive a postcard in the mail from the settlement administrator later this spring. Checks are expected to be sent by mail in mid-2022. To ensure the settlement administrator can find you, federal loan borrowers who may be eligible for a restitution payment are encouraged to update their contact information in their studentaid.gov account or create an account if they do not already have one.

• Studentaid.govis the U.S. Department of Education’s main website for federal student loans and a portal to access information about all your federal student loans. You can use yourstudentaid.gov account to apply for repayment plans, consolidate your federal loans, explore repayment plans with a loan simulator, and use the Public Service Loan Forgiveness (PSLF) Help Tool.

Navient will notify eligible private loan borrowers of the discharge of their private loans in writing by July 2022. Consumers who are eligible for the private loan cancellation under the settlement do not need to take any action.

For additional information and settlement updates, please visit the settlement administrator’s website www.NavientAGSettlement.com or call the settlement hotline at 1-833-630-1416.

The settlement includes conduct reforms, including prohibitions on unfair and deceptive conduct and terms designed to ensure that Navient improves its servicing and debt collection operations by:

• explaining the benefits of income-driven repayment plans and offering to estimate income-driven payment amounts before placing borrowers into optional forbearances;
• refraining from compensating customer service agents in a manner that incentivizes them to minimize time spent counseling borrowers;
• making additional attempts to notify borrowers of the need to annually recertify income and family size information to continue making income-driven payments;
• training alternative repayment specialists who will receive calls from distressed borrowers and help them to explore repayment options;
• creating public service specialists who will help public service workers access Public Service Loan Forgiveness (PSLF) and related programs;
• sending notices to FFEL borrowers about the U.S. Department of Education’s recently announced PSLF limited waiver opportunity, which temporarily offers millions of qualifying public service workers the chance to have previously nonqualifying repayment periods counted toward loan forgiveness if they consolidate into the Direct Loan Program;
• using default payment allocation methods that are favorable to borrowers (e.g., allocating overpayments to loans with the highest interest rate);
• enabling borrowers to provide one-time or standing instructions to control the allocation of their payments between their loans;
• providing billing statements clarifying the amount due, the amount past due, the borrower’s current repayment plan, and if applicable, their income-driven repayment recertification status;
• refraining from charging multiple fees for a single late payment, fees for entering forbearance, or payment processing fees;
• providing payment histories identifying how payments were applied and the reason for capitalization events;
• ensuring consistent evaluation of requests for alternative repayment arrangements and the provision of accurate information regarding alternative repayment options for private loans;
• refraining from informing private loan borrowers that their loans are non-dischargeable in bankruptcy;
• easing certain cosigner release rules and providing information to private loan borrowers about the process and criteria for securing cosigner release; and
• describing each default resolution option available to federal loan borrowers with defaulted loans.

To find out which company services your federal loans, log in to your studentaid.gov account, go to your account dashboard and scroll down to the section titled “My Loan Servicers.” Alternatively, you can call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.

To identify a private loan servicer, look for the most recent communication from the entity that sends bills for your private loan or check your credit report.

If you reside in Massachusetts, you can file a complaint with the Massachusetts Attorney General’s Student Loan Ombudsman at www.mass.gov/ago/studentloans.

If you reside in another state, you can file a complaint with your home state’s attorney general. A list of state-by-state complaint filing resources is available here.

You can also file a complaint with the Consumer Financial Protection Bureau (CFPB), a federal agency responsible for consumer financial protection. If your complaint involves a federal student loan, you can file a complaint with the Federal Student Aid Ombudsman.

Certain states, like Massachusetts, have state-level student loan advocates who can help individual borrowers resolve complaints and explore their repayment options. A list of these advocates (sometimes called “ombudspersons”) is available on the National Consumer Law Foundation’s website.

The requirements of the PSLFProgram, which is administered by the U.S. Department of Education, are availablehere.

Loan forgiveness is also available to some borrowers under the Temporary Expanded Public Service Loan Forgiveness (TEPSLF)Programeven if their repayment plan doesn't qualify under regular PSLF.Information aboutTEPSLF is availablehere.

For a limited time, borrowers may also be eligibleto receive credit toward PSLFunder the U.S. Department of Education'sOne-Time Adjustmenteven if their loan type,repayment plan, or repayment historydon't qualify under regular PSLFrules. However, borrowers may need to consolidate into the Direct Loan program and/or file employment certifications by December 31, 2023 to benefit.Information on theOne Time Adjustment is availablehere.

Massachusetts residents who need help exploring PLSF or the One-Time Adjustment are encouraged to file aStudent Loan Help Requestwith the Massachusetts Attorney General’s Student Loan Ombudsman atwww.mass.gov/ago/studentloans.

If you struggle to afford your federal student loan payments, consider applying for an income-driven repayment plan. Under income-driven plans, payments can be as low as $0 per month. Monthly payment amounts are based on family size and income. Income-driven plans also offer the possibility of loan forgiveness after 20 or 25 years of qualifying payments and can provide valuable interest subsidies.

• The Revised Pay As You Earn (REPAYE) plan offers the most generous interest subsidy. Specifically, under REPAYE:
  • On subsidized loans, you do not have to pay the difference between your monthly payment amount and the interest that accrues for your first three consecutive years in REPAYE.
  • On subsidized loans after these first three years and on unsubsidized loans during all periods, you only have to payhalfthe difference between your monthly payment amount and the interest that accrues.

More information on income-driven plans is available here. You can also use the U.S. Department of Education’s Loan Simulator to explore your repayment options.

If you previously enrolled in an income-driven plan but experienced a loss of income or increase in family size, you may qualify for a new lower payment amount based on your changed financial circ*mstances.

For at least six months after repayment resumes,Direct Loan borrowers will be able to “self-certify” their income when applying for income-driven repayment or requesting recalculation of their payment amount, meaning that they can report their income without having to submit tax returns or alternative documentation of income. This will make it even easier to apply for income-driven repayment or request recalculation.

Massachusetts residents who need help exploring repayment options are encouraged to file a Student Loan Help Request with the Massachusetts Attorney General’s Student Loan Ombudsman at www.mass.gov/ago/studentloans.

• Aidvantage will send you a welcome letter to let you know your loans are with Aidvantage.
• You can call Aidvantage at 1-800-722-1300.
• Once your loans are transferred you should be able to log in to your Aidvantage online account at aidvantage.com using the same User ID and Password you used at Navient.
• More information about the servicing transfer is available on Navient’s website.
• Eligibility under the settlement for a federal loan forbearance steering payment is not affected by the transfer of servicing to Aidvantage.