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$4.3M in debt to be canceled for nearly 200 student loan borrowers in Hawaii

The Maui News

A total of $4.3 million in debts will be cleared for 196 student loan borrowers in Hawaii, with another 1,380 receiving restitution payments, under a settlement with Navient over allegations of unfair and deceptive lending practices, Hawaii Attorney General Holly Shikada announced Tuesday.

The $1.85 billion settlement, joined by a coalition of 39 attorneys general, resolves claims that since 2009, the student loan servicer steered struggling student loan borrowers into costly long-term forbearances instead of counseling them about the benefits of more affordable income-driven repayment plans, despite representing that it would help borrowers find the best repayment options for them, according to a news release from the state Department of the Attorney General.

“Student loan borrowers should have the option to receive counseling about income-driven repayment,” Shikada said. “This settlement ensures counseling will occur before student loan borrowers are forced to accept costly long-term forbearances, which can lead to dire financial and personal consequences.”

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 news release said.

Under the terms of the settlement, Navient will cancel the remaining balance on $1.7 billion in subprime private student loan balances owed by more than 66,000 borrowers nationwide. In addition, Navient will pay $142.5 million to the attorneys general. A total of $95 million in restitution payments of about $260 each will be distributed to approximately 350,000 federal loan borrowers who were placed in certain types of long-term forbearances.

As part of the settlement, Hawaii will receive a total of $367,867 in restitution payments for 1,380 federal loan borrowers.

Borrowers receiving private loan debt cancellation will receive a notice from Navient by July, along with refunds of any payments made on the cancelled private loans after June 30, 2021. Federal loan borrowers who are eligible for a restitution payment of approximately $260 will receive a postcard in the mail from the settlement administrator later this spring.

Federal loan borrowers who qualify for relief under the settlement do not need to take any action except updating or creating their studentaid.gov account to ensure that the U.S. Department of Education has their current address. For more information, visit NavientAGSettlement.com.

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