Douglas Olsen
Navient is a company that provides technology-enabled education finance solutions to simplify complex problems and help millions of people achieve success. The company has been involved in a number of lawsuits and settlements regarding its student loan practices, including allegations of predatory lending and unfair servicing practices. As a result of these settlements, some borrowers may be eligible for loan forgiveness or cancellation. Additionally, Navient has transferred its loan servicing operations to MOHELA, a non-profit, governmental corporation dedicated to helping families successfully repay their student loans. Borrowers can now access their MOHELA online accounts and make payments directly to MOHELA.
| Characteristics | Values |
|---|---|
| Loan Servicer | MOHELA |
| Loan Forgiveness | Private loan borrowers whose schools misled them |
| Loan Cancellation | Borrowers with Navient student loans originated between 2003 and 2014 |
| Variable Rate | Not available in AK, IL, MN, NH, OH, TN, and TX |
| Loan Settlement | $260 restitution for federal student loan borrowers in certain states |
| Unfair Practices | Failure to follow borrower instructions, misleading delinquent borrowers, promoting “cosigner release” |
| Debt Relief | Borrowers with private subprime student loans through Sallie Mae between 2002 and 2014 |
| New Servicer | Aidvantage |
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What You'll Learn
Navient student loan forgiveness
As of October 21, 2024, MOHELA has taken over the servicing of Navient student loans. MOHELA is a non-profit, governmental corporation that helps families repay their student loans. While MOHELA now handles your loan, you still have options for loan forgiveness if you were a Navient borrower.
Navient borrowers can apply for private loan forgiveness if their school misled them. Additionally, borrowers with private student loans originated by Sallie Mae between 2003 and 2014 that defaulted and were charged off are eligible for cancellation. This cancellation was automatic, and borrowers did not need to do anything to have their qualifying debts wiped away. The settlement cancelled remaining balances, totaling about $1.7 billion, for borrowers who attended for-profit colleges with very low graduation rates.
Borrowers in certain states whose federal student loans were previously serviced by Navient and placed in specific types of long-term forbearances between October 2009 and January 2017 received a $260 restitution as part of a 2022 settlement with 39 states.
Furthermore, a campaign was launched in May 2024 to publicize a student loan forgiveness program that Navient had been quietly offering to some borrowers.
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Navient borrowers' loan cancellation
As of October 2024, MOHELA has taken over the servicing of Navient student loans. This means that MOHELA will now work with borrowers on repayment plans and other issues related to their student loans.
Navient borrowers may be eligible for loan cancellation under certain circumstances. In 2022, Navient delivered $1.7 billion in debt cancellation to approximately 66,000 private loan borrowers. This was the result of a settlement that resolved allegations of unfair and deceptive student loan servicing practices and abuses in originating predatory student loans. The settlement also provided $95 million in restitution payments to approximately 350,000 federal loan borrowers who were steered into long-term forbearance.
To be eligible for loan cancellation under this settlement, borrowers must have taken out private student loans with Sallie Mae between 2002 and 2014 and had more than seven consecutive months of delinquent payments. Federal loan borrowers who were placed in long-term forbearance instead of income-driven repayment plans may also be eligible for restitution if they resided in one of the participating states as of January 2017.
Additionally, Navient borrowers can apply for private loan forgiveness if they believe they were defrauded or misled by their school. This process is known as borrower defence to repayment and allows borrowers with federal student loans to apply for debt cancellation. However, it has been reported that hundreds of student loan borrowers who applied for debt cancellation through this process have been denied relief by Navient. Over 20 Democratic lawmakers, including Sen. Elizabeth Warren, have urged an investigation into Navient's handling of these applications, arguing that the company has the authority to cancel the loans of impacted borrowers without requiring a lengthy application process.
It is important to note that there are no exclusive Navient student loan forgiveness programs. However, borrowers with Navient student loans may be eligible for general student loan forgiveness programs.
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Student loan servicing transfer from Navient to MOHELA
On October 21, 2024, Navient transferred its student loan servicing to MOHELA, a non-profit, governmental corporation and one of the largest student loan servicers in America. MOHELA has over 40 years of experience and is dedicated to helping families successfully repay their student loans. This change was communicated to borrowers throughout 2024.
MOHELA will now handle all the details on behalf of the loan owner, such as collecting and processing payments and answering any questions. As the new loan servicer, MOHELA will work with borrowers on repayment plans and assist with other issues related to their student loans. Borrowers can continue to use the same address to send payments, but the name on the check should now be updated to MOHELA.
MOHELA has sent out welcome letters to borrowers, informing them of the transfer. Borrowers can now access their MOHELA online accounts and make payments through the MOHELA website. The website also provides a checklist with important details, including contact information and instructions on how to make payments. Borrowers can log in to their accounts using their existing user IDs and passwords.
It is important to note that the interest rate on loans, whether fixed or variable, is governed by the terms of the original loan agreement. The loan servicer must adhere to these terms. Interest rates on federal student loans are set by Congress, while interest rates on private loans are determined by the lender at the time of loan origination.
Regarding loan forgiveness, Navient borrowers may be eligible for private loan forgiveness if their school misled them. Additionally, borrowers with Navient student loans originated between 2003 and 2014 may be eligible for loan cancellation. In July 2022, Navient notified borrowers of cancelled loans, and any refunds for payments made after June 30, 2021. This cancellation impacted private student loans originated by Sallie Mae that defaulted and were charged off. The settlement cancelled approximately $1.7 billion in remaining balances for borrowers who attended for-profit colleges with low graduation rates.
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Navient's settlement with 39 states
Navient borrowers can apply for private loan forgiveness if their school misled them. Borrowers with Navient student loans originated between 2003 and 2014 can also get cancellation. The cancellation was automatic, and borrowers did not need to take any action to have their qualifying debts cleared. However, this cancellation did not apply to federal student loan borrowers.
Navient has been accused of mishandling student loans and steering borrowers toward multiple forbearances instead of income-driven repayment plans. As a result, the Consumer Financial Protection Bureau (CFPB) banned Navient from federal student loan servicing and ordered the company to pay $120 million in restitution to impacted borrowers and a $20 million fine to the CFPB's victims' relief fund.
The 2022 settlement with 39 states is separate from the ongoing litigation stemming from a suit filed by the CFPB in January 2017, but the arguments are largely the same. The settlement addressed claims that certain student loans should have been discharged in bankruptcy, providing $182.4 million in debt relief.
Navient is no longer servicing student loans. As of October 21, 2024, MOHELA, a non-profit, governmental corporation, has taken over the servicing of Navient student loans. MOHELA is dedicated to helping families successfully repay their student loans and is one of the largest student loan servicers in America.
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Navient's unfair and deceptive practices
In 2021, the Department of Education ordered Navient to return over $22 million in overcharges. In 2022, 39 state attorneys general announced a $1.85 billion settlement with Navient for unfair, deceptive, and abusive practices in originating predatory student loans and forbearance steering. The Consumer Financial Protection Bureau (CFPB) also sued Navient for failing borrowers at every stage of repayment.
Navient has been accused of unfair and deceptive practices in servicing and collecting student loans. These practices include:
- Failing to follow borrower instructions concerning the allocation of payments
- Asking delinquent borrowers to pay more than the amount necessary to bring their accounts up to date
- Promoting "cosigner release" benefits for private loans while implementing requirements designed to ensure that very few co-signers were ever released
- Repeated errors in allocating and applying borrower payments
- Failing to implement adequate processes and procedures to prevent errors from recurring
- Failing to disclose the date by which a consumer must recertify an income-driven repayment plan
- Misrepresenting the consequences of failing to submit such materials
- Failing to adequately notify borrowers who consented to electronic communication of the existence of the renewal notice
- Steering struggling borrowers toward multiple forbearances instead of income-driven repayment plans
- Providing unclear information about how to re-enroll in income-driven repayment plans and how to qualify for a co-signer release
The settlement with the 39 state attorneys general 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.
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Frequently asked questions
It depends on the type of loan and your circumstances. Federal student loan borrowers do not receive debt cancellation as a result of the settlement. However, borrowers with Navient student loans originated between 2003 and 2014 can get cancellation if their school misled them.
Private loan borrowers received notification of their cancelled loans by July 2022. You can also check your online account at servicing.mohela.com.
Contact the Office of the Customer Advocate (OCA).
Your Navient student loan is now serviced by MOHELA. You can access your MOHELA online account at servicing.mohela.com and make payments there.
