Are Navient Student Loans Canceled?

• Navient, one of the country’s largest financial aid institutions, had to forgive the debt of 66,000 borrowers.
• This verdict was reached after it was determined that Navient was exploiting borrowers and putting them on plans that made it very difficult for borrowers to pay back their loans.
• To ensure you are not being taken advantage of, it is important to do research on the different repayment plans that are available.

One of the nation’s more recognizable financial aid institutions, Naivent, had to forgive the debt of 66,000 borrowers earlier this month. This decision came after a lawsuit with 39 state attorney generals determined that the student loan servicer was forcing a portion of their borrowers into costly repayment plans, which they knew they would not be able to pay off. As a result, the public service institution forgave $1.7 billion of student loan debt.

Eligible Borrowers

To qualify for your loan being forgiven, your loan must have been approved and taken out between 2002 and 2014. Furthermore, you are only eligible if your respective state partook in the lawsuit against Navient. The states that took part in the lawsuit include Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Iowa, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, Washington, West Virginia, and Wisconsin.

Lastly, you must have been in delinquency for a minimum of seven months, meaning you were unable to pay your loans. 

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Who was Affected by Navient’s Policies?

When potential borrowers came to Navient to apply and receive funds for for-profit schools, their credit report was one of the key pieces of financial information that these institutions required. 

Some borrowers had a lower credit score, indicating they have a higher chance of defaulting on their loan. Thus, Navient would provide higher than standard interest rates to compensate for the higher risk. However, these high-interest rates made it difficult for borrowers to pay back their loans, causing them to be in a constant cycle of student loan debt. 

Are Other Student Loans Cancelled?

Unfortunately, no other groups of people have their private student loans canceled. However, there is a silver lining, as an additional 350,000 borrowers will be reimbursed $260. These people are getting money back because Navient put these borrowers in long-term repayment suspensions. 

How to Prevent this from Happening to You

Most of the time, institutions will have repayment options for your federal student loans after attending your higher education program. However, sometimes, these institutions may attempt to take advantage of your situation and give you a repayment plan which negatively affects you in the long run. Therefore, below is an explanation of the income-based repayment plan, one of the most common repayment plans, and what to expect, so you do not fall victim to endless cycles of debt.

Income-Based Repayment Plan 

This repayment method is one of the most common ways to calculate the amount of money the student borrower pays back monthly, accounting for their income level. The monthly repayment amount is dependent on your discretionary income, which is the difference between your adjusted gross income and 150% of the federal poverty level income for your family size and state. 

The maximum rate they can charge under this plan is 15%; therefore, you can calculate a ballpark estimate of how much you would pay monthly if you accepted this plan.

If you wish to view a complete list of the different repayment options, click here to read more. 

Paying for college is difficult, but it should not be made impossible. Educating yourself on some of the different repayment options will prepare you when planning to pay off your federal loans. To secure your financial future and educate yourself about student aid, resources for federal student loan borrowers are available on CapWay’s Learn Money hub. 

Were you affected by the Navient loan forgiveness program? Let us know in the comments below. 

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