If you’ve taken the loan for a student and Navient (previously called Sallie Mae) was your servicer, you could be wondering if it’s possible to qualify to loan forgiveness thanks to the recent announcement of Navient student loan settlement.
in January of 2022 Navient One of the nation’s biggest students loan providers, agreed to the $1.85 billion settlement with the government over claims that it defrauded students through deceitful and fraudulent loans. The settlement is the result of an action brought by Navient from 39 states’ attorneys general and provides a few customers with relief from their student loan debt.
The accusations: Navient directed struggling borrowers towards costly forbearance plans than directing them to more appropriate Income-driven Repayment (IDR) programs. In the end, they incurred unnecessary interest, which added to their debts and further pushed them into debt. If borrowers had received the right guidance, they may be placed in an IDR plan that had lower costs, sometimes as low as zero dollars per month, based on their income.
What kind of student loan Relief Will the Settlement Offer?
The settlement gives two types of relief. Be aware that it’s only a temporary relief and isn’t applicable to all borrowers.
Private student loan cancellation. The borrower who used private student loans through Sallie Mae to attend for-profit colleges between 2002 and 2014 could be qualified to have their loans cancelled (aka release). The balance or a percentage of the amount you owe could be cancelled, and any balances paid following June 30th, 2021 may be reimbursed.
These borrowers are those who have been issued subprime loans (made to borrowers who have low ratings on their credit) or students who attended a particular non-profit institution. Look up the settlement details for the list of schools.
Restitution. The borrowers who have federal student loans and were forced into lengthy (2plus years) periods of forbearance–periods with no payment, instead of getting counseling regarding repayment plans based on income may be eligible for an “restitution” settlement of 260 dollars. This isn’t a loan forgiveness option available to the people.
What should I know about Eligibility?
In order to be eligible for Federal loan restitution, which is the $260 amount–you have to reside in at least one of 39 states who sued Navient. The restitution-participating states are: AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, IL, IN, KY, LA, MA, MD, ME, MN, MO, MS, NC, NE, NJ, NM, NV, NY, OH, OR, PA, TN, VA, WA, and WI.
To qualify for cancellation on certain private subprime loans, borrowers must reside in any of the above restitution-participating states, or Arkansas, Kansas, Michigan, Rhode Island, South Carolina, Vermont, or West Virginia. Postal code of a military address is also a requirement.
Review the information at navientagsettlement.com for more details on eligibility.
What should I do If I Believe I’m Qualified?
You don’t have to take any action in order to get the benefits. If not sure if you’re eligible do not worry. Navient will inform all customers (in written form) that receive private repayments for loan cancellation or restitution.
The best step is to ensure your contact information is current and up current according to Navient, the U.S. Department of Education and Navient. Visit studentaid.gov to review your personal information and make changes. You can then contact or go through the web site of Navient to update or review your information regarding private loans.
If the loan is cancelled in connection with your settlement with the bank, you might be taxed in respect of the forgiveness amount. You should consult with an expert tax advisor about the tax consequences.
How does the public service loan Forgiveness (PSLF) Refinancing is affected by
The settlement stipulates that Navient will have to change its methods of counseling. The service provider must provide explanations of deferment, forbearance and income-driven repayment programs to the borrowers, as in helping them choose the best option for repayment for them.
Navient must also inform borrowers on public service loan forgiveness (PLSF) to federal loan, and inform them of the PSLF restricted waiver which is open until the 31st of October, 2022.
If you’re employed in a an area that qualifies as public service (a 501c3 or government position) You could get a waiver regardless of whether your loans are managed through Navient and/or another provider. PSLF does not require you to work for a qualified public service organization, but it has relaxed other restrictions.
You could be eligible for forgiveness if you’ve one among the following
- Direct Loans that are not repaid via a qualified income-driven payment plan
- FFEL, Perkins, or other federal student loans that cannot be condensed into Direct Loan
- Disqualification of payments because of late payment or in part
Apply by October 31, 2022.
What else do you need to know about Student Loan Forgiveness
It is worth noting that the Department of Education offers several federal forgiveness programs in addition to PSLF. It also offers the Teacher loan forgiveness program. You could be qualified to be forgiven depending on your specific state when you are employed in the field of a specific occupation. It’s worth looking into.
Also, forgiveness is available by the Income Driven Repayment Plan. In these plans, you pay eligible income-based repayments for twenty or 25 years, in accordance with the plan, and after that the balance is paid off. Student loans that are private in nature don’t generally suitable for forgiveness. Keep your eyes for studentaid.gov for updates regarding the forgiveness of student loans as well as who’s eligible and how to find out more.
If You’re Not Going to Profit in Navient Settlement, What Can You Do? Navient Settlement, What Can You Do?
Even if you’re not included as part of the Navient settlement the federal student loans could qualify for discharge if you believe that you were misled or deceived by misleading or false facts. The most common reasons why someone could be eligible for discharge include:
- Untrue certificate. The discharge for false certification is applicable to those who believe their school has falsely confirmed their eligibility to be eligible for loans. For instance, if the institution falsely affirmed your ability in the scheme, or falsely verified your eligibility for it, or if they signed your name on the application or promissory notes without your consent.
- Unpaid refund discharge. If you resigned from the school and the institution didn’t adequately refund the loan at the time you resigned, you may be eligible to receive the part of the loan not paid to be discharged.
- Borrower defense against repayment discharge. If you think the school misled or misled you or engaged in misconduct or violated the law of the state it could be a case to be discharged. Examples include misrepresenting graduates’ rate of placement, job prospects and accreditation program status, their ability to transfer credits and the claims of completion of programs.
Make sure you submit your complaint to your Federal Student Aid Feedback Center or calling 877-557-2575 to speak with to speak with the Federal Student Aid Ombudsman Group. The ombudsman’s group will help you understand your rights, help in determining and assessing your options to resolve specific issues and will direct you to appropriate services.
The forms for discharge applications are available at the StudentAid.gov website. Review the information before applying: unpaid refund discharge, false certification discharge, or borrower defense discharge.
