Jeff Fuentes Gleghorn
After several years of litigation co-led by Pennsylvania’s Attorney General Josh Shapiro, officials announced a settlement targeting Navient, formerly known as Sallie Mae. The result? Navient will cancel $1.7 billion in private student loans and pay $95 million back to people harmed by their practices. Pennsylvanians will receive a $70.5 million portion of the settlement.
Private student loans will be canceled for Pennsylvanians who attended a number of for-profit colleges, including DeVry and ITT Tech, who were prosecuted by federal or state law enforcement. Navient allegedly steered students at these colleges towards subprime loans, even though it knew that people were unlikely to be able to pay the loans back. At a press conference, Attorney General Shapiro said “Navient knew that people relied on their loans to make a better life for themselves and for their children. And instead of helping them, they ran a multi-billion dollar scam.” There are 2,467 Pennsylvanians who fell victim to this tactic and will be forgiven a combined $67 million in student loans, which is an average of over $27,000 per person.
Navient has also been accused of pushing borrowers to place federal loans into forbearance instead of informing them about other, more affordable repayment plans. As part of the settlement, they will pay $260 to 350,000 people across 39 states. Approximately 13,000 Pennsylvanians will receive this money, accounting for the other $3.5 million coming to the Commonwealth.
Student loan debt is a growing problem in the United States, one that harms Erie County residents. Nearly one in four people in Erie County have student loans, with a median amount of nearly $23,000 and costing each person almost $2,000 a year in loan payments. These loans make it difficult for people to start families or buy homes, and choke the local economy. The debt relief from this settlement is an important first step towards addressing the $1.7 trillion of student loan debt in the country.