Attorney General Neronha announces $4.6 Million


Settlement with Student Loan Servicer Navient


Rhode Island borrowers will receive over $4.6 million in relief as part of $1.85 billion national settlement.


PROVIDENCE, R.I. – Attorney General Peter F. Neronha announced today that Navient, one of the nation’s largest student loan servicers, will provide relief totaling $4.6 million to Rhode Island borrowers to resolve allegations of widespread unfair and deceptive student loan servicing practices and abuses in originating predatory student loans. Under terms of the national settlement, Navient will pay a total of $1.85 billion to student loan borrowers nationwide.


This settlement, joined by a coalition of 39 attorneys general, resolves claims that since 2009, despite representing that it would help borrowers find the best repayment options for them, 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.


“There are thousands of student loan borrowers in our state and not one of them deserves to be taken advantage of by their loan servicer,” said Attorney General Neronha. “When a student loan servicer, or any business for that matter, operates as a bad actor and harms Rhode Islanders, this Office will step in to protect them. This settlement will directly benefit hundreds of borrowers in Rhode Island with debt cancellation, and thousands more borrowers by ensuring these practices will not happen again.”


Attorney General Neronha filed the settlement as a proposed Consent Judgment and Complaint today in Providence County Superior Court. The settlement will require court approval.


According to the attorneys general, the interest accrued because of Navient’s forbearance steering practices was added to the borrowers’ loan balances, pushing borrowers further in debt. Had the company instead provided borrowers with the help it promised, income-driven repayment plans could have potentially reduced payments to as low as $0 per month, provided interest subsidies, and/or helped attain forgiveness of any remaining balance after 20-25 years of qualifying payments (or 10 years for borrowers who qualify under the Public Service Loan Forgiveness Program).


Navient also allegedly originated predatory subprime private loans to students attending for-profit schools and colleges with low graduation rates, even though the company knew that a very high percentage of such borrowers would be unable to repay the loans. Navient allegedly made these risky subprime loans as “an inducement to get schools to use Navient as a preferred lender” for highly profitable federal and “prime” private loans, without regard for borrowers and their families, many of whom were unknowingly ensnared in debts they could never repay.


Under the terms of the settlement, 226 Rhode Island borrowers will receive a total of $4,670,126 million in private loan debt cancellation.


The settlement includes conduct reforms that require Navient to explain the benefits of income-driven repayment plans and to offer to estimate income-driven payment amounts before placing borrowers into optional forbearances. Additionally, Navient must train specialists who will advise distressed borrowers concerning alternative repayment options and counsel public service workers concerning Public Service Loan Forgiveness (PSLF) and related programs.


The conduct reforms imposed by the settlement include prohibitions on compensating customer service agents in a manner that incentivizes them to minimize time spent counseling borrowers. A total of 10,060 Rhode Island borrowers with student loan balances of over $253 million will benefit from changes in student loan practices and escalated resolution procedures contained in the settlement.


The settlement also requires Navient to notify 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—provided they consolidate into the Direct Loan Program and file employment certifications by October 31, 2022.


As a result of today’s settlement, borrowers receiving private loan debt cancellation will receive a notice from Navient by July 2022, along with refunds of any payments made on the cancelled private loans after June 30, 2021.


Borrowers who qualify for relief under this settlement do not need to take any action except update or create their account to ensure that the U.S. Department of Education has their current address. For more information, visit


Until recently, Navient had a contract to service federal student loans owned by the U.S. Department of Education, including a large portfolio of loans made under the Direct Loan Program and a smaller portfolio 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.


Today’s settlement was led by attorneys general in Pennsylvania, Washington, Illinois, Massachusetts, and California, and was joined by attorneys general in Arizona, Arkansas, Colorado, Connecticut, the District of Columbia, Delaware, Florida, Georgia, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia, and Wisconsin.


Visit our web site for more information and Frequently Asked Questions about the Navient Settlement.


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