Navient to Cancel $1.7 Billion in Private Student Loan Debt

The decision was part of a deal the student loan company reached with 39 states

Navient, one of the largest student loan servicers, has reached a settlement with 39 states, in which it will cancel $1.7 billion in private student loan debt. The settlement marks an end to six separate lawsuits filed against the student loan company, which was accused of giving out loans to millions of borrowers who were unlikely to be able to repay them, and also improperly recommending federal loan forbearance instead of better relief options.

The company will also pay $145 million to the states and provide some restitution for borrowers in its former federal loan portfolio.

  • Navient has reached a settlement with 39 states across six lawsuits to cancel $1.7 billion in private student loans and make a one-time payment of $145 million to the states involved.
  • The company must also provide $95 million in restitution for select federal student loan borrowers.
  • The states alleged that the lender disbursed student loans to college students who would be unable to repay them.
  • The settlement allows Navient to make restitution while still denying that it violated the law.

Millions of Borrowers to Have Their Private Student Loans Wiped Out

Navient used to be one of the top federal student loan servicers—the company was established in 2014 to take over Sallie Mae's federal student loan portfolio. Navient ended its contract with the federal government in 2021, and now only services private student loans.

There are two claims from the 39 states that sued Navient in six separate lawsuits. First, the student loan provider steered struggling federal loan borrowers toward forbearance instead of toward relief programs like income-driven repayment or loan forgiveness programs.

Second, Navient originated high-interest private student loans to college students who were attending predatory for-profit schools and, therefore, unlikely to be able to repay those loans.

As a result, Navient has been ordered to cancel $1.7 billion in private student loans, based on certain qualifications, which we'll cover in a minute. The servicer must also make a one-time payment to the 39 states involved in the lawsuits and provide $95 million in restitution to 350,000 federal student loan borrowers who were impacted by its improper actions.

Find Out if You Qualify for Cancellation or Restitution

According to the settlement, not all of Navient's current and past private and federal loan borrowers are eligible for relief. On the private student loan side, only certain loans issued by Navient or Sallie Mae qualify. Here are the eligibility details:

  • Borrowers must have attended certain for-profit schools, such as Corinthian schools, DeVry University, the Art Institutes, ITT Technical Institutes, and others.
  • The student loans must have been disbursed between 2002 and 2014.
  • The student loans must have been delinquent for at least seven months prior to June 30, 2021.
  • The student loans must still be collectible under the borrowers' state statute of limitations, and they must still be reporting to the credit bureaus, as of June 30, 2021, are eligible.
  • Borrowers must live in an eligible state.

To qualify for restitution based on Navient's dealings with its federal student loan borrowers, you'll need to meet these criteria:

  • The borrower entered repayment on a Direct or FFEL-program federal student loan before January 2015.
  • The borrower had at least one federal student loan that was eligible for income-driven repayment between October 2009 and January 2017, but Navient's customer service team steered them into forbearance instead.
  • The borrower was not in an income-driven repayment plan prior to that forbearance.
  • The forbearance lasted two consecutive years or more, and at least half of it was to postpone payments going forward instead of to bring a delinquent account current retroactively. The borrower resides in one of the following states: AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, IL, IN, KY, LA, MA, MD, ME, MN, MO, NC, NE, NJ, NM, NV, NY, OH, OR, PA, TN, VA, WA, or WI.

Eligible borrowers will be notified sometime this summer if they qualify for relief or restitution under the settlement. You don't have to do anything to claim it. If you have questions, you can visit or contact your state's attorney general's office.

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  1. Office of the Attorney General for the District of Columbia. "AG Racine Announces Navient Will Provide $6.5 Million in Debt Relief & Restitution to DC Student Borrowers Over Unfair Practices."

  2. Navient Multi-State Settlement. "Common Questions."