Navient, one of the country’s largest student loan servicers, has agreed to forgive $8.2 million in private debt for Mississippi borrowers under a settlement reached by the Mississippi Attorney General’s Office last week.
Mississippi borrowers who qualify under the settlement, which was approved Saturday by a Hinds County Chancery Court judge, will see their debt erased in the next 90 days.
The Attorney General’s Office said it did not know yet how many borrowers qualify for the settlement, but it is likely only a narrow slice of the 438,000 Mississippians with student debt. The settlement mostly applies to borrowers with loans that became past-due starting in July 2014. Borrowers who are current on their loan payments will not see their debt forgiven.
The settlement also requires Navient to make $1.7 million in restitution payments to Mississippi borrowers who the company placed into certain forbearance plans. That will likely amount to an average restitution payment of $260 depending on how many Mississippi borrowers qualify, said Michelle Williams, the attorney general’s chief of staff.
Williams said Mississippi’s settlement is substantially similar to another deal that Navient announced last week. Starting in 2017, 39 states sued Navient for a slew of deceptive and illegal lending practices on subprime student loans the company knew borrowers could likely never repay. The settlement agreement reached with those states requires Navient to cancel $1.7 billion in student debt, and pay $95 million in restitution.
Mississippi did not join that lawsuit and instead sued Navient separately in 2018. In its complaint, the Attorney General’s Office described how Navient’s practices contributed to making Mississippi one of the worst states in the country for borrowers with student loan debt. Borrowers in Mississippi are significantly more likely to default than in other states — the fourth highest rate in the nation.
“The result of Navient’s conduct is a generation of Mississippi youth suffering under the crushing burden of a mountain of unnecessarily high student loan debt,” the suit alleged.
Mississippi borrowers who think they may qualify for the settlement should make sure their www.studentaid.gov account is updated to their current address.