Navient Student Loan Settlement: Are You Eligible for $260 Restitution Payment?

dusanpetkovic / iStock.com

Now that student loan servicing company Navient has agreed to a $1.85 billion settlement over alleged predatory and deceptive lending practices, tens of thousands of loan recipients might soon be getting debt cancellations and restitution payments.

See: 10 Ways To Pay Off Your Student Loans in One Year
Find: Why Are Women Bearing the Brunt of Student Loan Debt in America?

The proposed settlements with 39 states require Navient to cancel $1.7 billion in delinquent private student loan debts and pay $95 million in restitution, The New York Times reported.

The settlements were filed in courts around the country on Jan. 13, but they must first get judicial approval, according to The Washington Post. When that happens, the $95 million in restitution payments will be distributed to more than 350,000 federal student loan recipients, which comes out to roughly $260 each.

Most of the loans were made between 2002 and 2014. These private loans often came with a variable interest rate and provided a shorter payment window than federal student loans before defaulting.

How Will I Know if I’m Eligible for the Navient Restitution Payment?

If you were a loan recipient and wonder about your eligibility for the Navient restitution payments, keep an eye out for a postcard from the settlement administrator this spring. All eligible borrowers will get a postcard, WaPo reported, citing comments from state officials. Checks should go out in mid-2022.

Save for Your Future

One requirement for restitution payments is that you must have lived in a state participating in the settlement as of January 2017, and spent at least two years in forbearance — which means the lender let you pause or reduce payments for a limited time while interest continued to accrue.

What About the Navient Debt Cancellation?

Borrowers eligible for debt cancellation must have taken out private subprime student loans through Sallie Mae between 2002 and 2014, then had more than seven straight months of delinquent payments. Navient formed in 2014 when Sallie Mae split into two companies.

Learn: If Your Student Loans Were Forgiven, Here’s What You Should Do Next
Explore: How Gen Z Plans To Avoid Student Loans

Debt cancellations will vary by state. In Massachusetts and Pennsylvania, for example, the average debt being canceled is around $27,000, per The Washington Post. In Washington state, the amount being canceled is closer to $25,000.

Federal loan borrowers who qualify are advised to either update their studentaid.gov accounts, or create one to ensure the Department of Education has their current address.

Save for Your Future

More From GOBankingRates

About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.

Best Bank Accounts of July 2022

Untitled design (1)
Close popup The GBR Closer icon

Sending you timely financial stories that you can bank on.

Sign up for our daily newsletter for the latest financial news and trending topics.

Loading...
Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For our full Privacy Policy, click here.