There has been quite a bit of interest in the recent news that Navient, one of the largest providers of student loan services, will cancel the debt of 66,000 borrowers.
The main question people have asked: am I one of them?
Probably not, the short answer.
Only about 0.15% of the country’s student loan borrowers will get their debt settled from the settlement between the lender and dozens of countries.
Navient has been accused of making loans to those who cannot repay them. Under the terms of the agreement, another 350,000 federal student loan borrowers will receive a small check in the mail from the company.
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Navinent denied all allegations.
“The company’s decision to resolve these matters, which were based on unfounded claims, allows us to avoid the additional burden, expense, time and distraction in court,” Mark Helen, Navent’s chief legal officer, said in a statement.
Here are the details of the settlement, including who will actually get relief.
What loans will be cancelled?
Eligible borrowers include those with high-risk private student loans, which are given to people with low credit scores, from Sallie Mae (the former company of Navient).
To qualify, these loans also had to be obtained between 2002 and 2014, your mailing address must be in one of the countries that participated in the settlement and you must be at least seven months overdue.
The other group that will get a cancellation is those with private student loans from Sallie Mae who have attended some for-profit college and have faced federal or state law enforcement action.
Navient must contact affected borrowers by July 2022.
Who will get the check?
Among the accusations against Navint, the lender directed some consumers to incur an exorbitant cost rather than help them find an affordable repayment option.
As a result, the company has to write a check for about $260 to about 350,000 borrowers.
To qualify for payment, you must also meet a number of other requirements. This includes: You were enrolled in at least two consecutive years of forbearance between October 2009 and January 2017, entered repayment prior to January 2015 and at least one of your federal loans qualifies for a payment plan that caps bills with a share of your monthly revenue.
Compensation must be paid sometime in the spring.
Do I have to do anything?
No. The financial relief will be automatic.
“However, borrowers should ensure that the loan provider has their current contact information,” said Mark Kantrowitz, a higher education expert.
Kantrowitz said you likely won’t owe any taxes on the canceled debt or the $260 payment.
So what happens with broad tolerance?
Loan forgiveness has also been left out of the Democrats’ agenda to build back better.
The White House did not respond to a request for comment.