On January 13, 2022, thirty-nine state attorneys general (including ARKANSAS) announced that Navient, one of the nation’s largest student loan servicers and an originator of private student loans, will provide relief totaling approximately $1.85 billion to private and federal student loan borrowers and to the state attorneys general (ARKANSAS—approximately $6.8 million in relief). The settlement will resolve allegations of Navient’s widespread unfair and deceptive federal student loan servicing practices and abuses in its origination of predatory private student loans.

Borrowers can determine if Navient is their federal loan servicer by logging into their studentaid.gov account, going to the account dashboard, and scrolling down to the section titled “My Loan Servicers.” Alternatively, they can call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.

Navient will discharge the remaining balance on more than 66,000 private Sallie Mae or SLM student loans. It will cancel at least $1.71 billion or an average of about $25,000 per borrower. Eligible borrowers need not take any action, but instead Navient will notify qualifying borrowers by July 2022, that their loans are being fully discharged. Navient will also send refunds to these borrowers for any payments they made since June 30, 2021, on eligible loans.

To qualify for this discharge, a private student loan must have been originated between 2002 and 2014 by Navient’s predecessor, Sallie Mae (SLM Corp.), and must have been charged off by Navient as of June 30, 2021. Navient charges off a loan by the end of the month in which the interest on or principal of that loan becomes 212 days past due or eight billing cycles past due, whichever is earlier. Information on the status of a private student loan may be available from the loan’s servicer or by reviewing the borrower’s credit report. 

In addition to the above eligibility requirements, the loan must meet one of three conditions: 

1. The borrower at loan origination had a FICO score below 670 and attended a for-profit school or below 640 and attended a non-profit or public school;

2. The loan was used to attend one of the for-profit schools included on a list below; or

3. The loan originated under Sallie Mae’s Opportunity or Recourse program.

After July 2022, if eligible borrowers find their credit reports are still indicating the Sallie Mae private loan as due, they can dispute the debt with the consumer reporting agency. The agency will ask Navient to reinvestigate, and Navient should then report back that the debt is no longer due, resulting in its removal from the borrower’s credit report. If you need help regarding this debt, you can contact the Center for Arkansas Legal Services (or any attorney of your choice) for more information at 501-376-3423.

AUTHOR: CECILLE DOAN, STAFF ATTORNEY FOR THE CENTER FOR ARKANSAS LEGAL SERVICES