HARTFORD, Conn. (WTNH) – Thousands of Connecticut residents could receive loan relief and restitution after a $1.85 billion settlement with a student loan servicer.
Attorney General William Tong, Consumer Protection Commissioner Michelle Seagull, and Banking Commissioner Jorge Perez announced the nearly $2 billion settlement with student loan servicer Navient.
The settlement will direct millions in debt relief and restitution to thousands of CT borrowers.
The settlement, which was joined by a coalition of 39 attorneys general, resolves allegations of widespread unfair and deceptive student loan servicing practices and abuses in originating predatory student loans.
In Connecticut, 1,339 borrowers will receive $19 million in direct private loan debt relief. Additionally, 4,875 borrowers will receive nearly $1.3 million in restitution.
The state is set to receive $141,240 in restitution to be deposited into the general fund.
“Navient steered borrowers to costly payment plans, and away from reasonable and affordable options and programs. Their predatory loans left thousands of Connecticut families saddled with unaffordable debt. This settlement will send millions of dollars directly to thousands of Connecticut borrowers who were deceived by Navient’s abusive practices,” said Attorney General Tong. “This is a massive victory for borrowers, but there is still much work ahead to address the crushing financial burden of student loan debt. Connecticut families owe billions of dollars in student loans, an insurmountable barrier for many looking to own their own home, start a family, or grow a business. I am committed to continuing to work alongside my fellow attorneys general, and with state and federal officials, to address this financial crisis and ensure affordable education access for all.”
Under the terms of the settlement, Navient will cancel the remaining balance on $1.7 billion in private student loan balances owed by more than 66,000 borrowers nationwide.
Borrowers receiving private loan debt cancellation will receive a notice from Navient by July 2022. 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.
The settlement was led by Pennsylvania, Washington, Illinois, Massachusetts, and California, and was joined by attorneys general in Arizona, Arkansas, Colorado, Connecticut, the District of Columbia, Delaware, Florida, Georgia, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia, and Wisconsin.