LANSING, Mich. - Navient, a large student loan servicer, has settled allegations of predatory lending practices for $1.85 billion, Pennsylvania’s attorney general announced Thursday.
The settlement includes $1.7 billion in debt cancellation and $95 million in restitution, state Attorney General Josh Shapiro said in a news release.
"Navient repeatedly and deliberately put profits ahead of its borrowers – it engaged in deceptive and abusive practices, targeted students who it knew would struggle to pay loans back, and placed an unfair burden on people trying to improve their lives through education," Shapiro said in the release.
The settlement involves 39 state attorneys general and resolves claims that Navient led student borrowers into long-term forbearances instead of giving them advice on less costly repayment plans, Shapiro said.
Navient said it did not act illegally, and it did not admit any fault in the settlement, The New York Times reported.
"The company’s decision to resolve these matters, which were based on unfounded claims, allows us to avoid the additional burden, expense, time and distraction to prevail in court," Mark Heleen, Navient’s chief legal officer said, according to the Times.
Among the states included is Michigan, whose attorney general said the settlement will impact 1,576 student borrowers.
"The predatory practices used by Navient exploited students who wanted nothing more than an education," state Attorney General Nessel said. "The company placed borrowers in risky subprime loans, causing them to incur debts they could never repay. This settlement reflects accountability for affected borrowers across the country."