BOSTON (WBZNewsRadio) — Massachusetts Attorney General Maura Healey said student loan company Navient has reached a settlement over allegations of giving out predatory student loans.
On Thursday, Healy said a group of 39 state Attorneys Generals is launching a $1.85 billion settlement for more than 400,000 borrowers that holds Navient accountable for its failures.
In a statement, Healy said the company pushed people taking out loans into "costly long-term forbearances," instead of providing more affordable options. She also said this is an important step toward addressing the "broken" student loan repayment system.
“Navient promised to help struggling borrowers find the repayment options that worked best for them, but instead steered borrowers into situations that pushed them deeper into debt,” Healey said. “Today’s settlement requires Navient to fix their mistakes, provides relief for families in Massachusetts.”
Instead of letting borrowers take a break from monthly payments, the interest that accrued as a result of Navient’s federal loan forbearance practices was added to borrowers’ loan balances.
In an effort to become a preferred lender, Navient also allegedly created unfair subprime private student loans that it knew would likely fail. During Thursday’s settlement hearing, Healy said this was a longtime coming.
“Navient, or Sallie Mae as it was previously known, has been on our radar for a long time. My office has been leading an investigation of this company,” she said. “Not only was Navient’s conduct deceptive, it’s servicing failures has also harmed borrowers from all walks of life.”
Healy also said that eligible borrowers need to take no action in order to receive relief.
“It will come to,” she said. “Restitution payments will sent out in the mail to eligible federal student loan borrowers later this year once the settlement is approved.”
Healy also encouraged people to go to the U.S. Department of Education’s website to update their contact information.