KANSAS CITY, Mo. — Navient, one of the largest student loan servicers in the country, will cancel millions of dollars in student debt and pay millions in restitution to Missourians and Kansans after reaching a civil settlement over accusations of predatory practices.
The settlement terms in Missouri amount to $53 million - $2.5 million in restitution and $51 million in private loan debt cancellation.
In Kansas, state Attorney General Derek Schmidt said the settlement total reaches $10.3 million.
"More than 400 Kansans will receive nearly $10.3 million in student loan relief as part of a nationwide settlement with one of the country’s largest student loan servicers," a release from Schmidt's office said.
Missouri Attorney General Eric Schmitt's office announced the news for Missouri. In addition to Missouri and Kansas, Navient has also made agreements with 37 other states who joined a lawsuit over its practices.
According to the Kansas AG's release, the total settlement, including every state, amounts to $1.85 billion.
Navient may be better known under the brand name "Sallie Mae."
"Navient was created in 2014 when the company SLM Corporation (known as Sallie Mae) separated its loan servicing from its consumer banking business," according to the Kansas AG's release. "After the separation, the company’s loan servicing and collection operations were re-branded as Navient, and the consumer banking business continued under the Sallie Mae brand."
Navient was accused of steering borrowers to worse payment plans, since 2009, according to the Missouri AG.
"After 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," the Missouri AG's release said.
It has also been accused to lending to students the company knew would not be able to pay back the loans.
"Navient also allegedly originated predatory subprime private loans to students attending for-profit schools and colleges with low graduation rates, even though it knew that a very high percentage of such borrowers would be unable to repay the loans," the Missouri AG's release states.
Those with loans from the company can expect a notice from Navient if their debt is being canceled, or if they can expect to get money back on loans already paid off.