The student loan servicer Navient has reached a settlement with the U.S. Consumer Financial Protection Bureau for $120 million. This will settle a 2017 lawsuit against them that accused Navient of deceiving the borrowers and processing payments incorrectly.
Navient Settlement Payout Date
Navient is one of the country’s largest student loan servicers and has been a party to many legal actions over the years. A settlement in one such case has reached millions of its borrowers. Finally, Navient entered into an extensive 2023 multi-state agreement with a host of state attorneys general.
This is a settlement over allegations of the company engaging in deceptive and predatory practices, mainly concerning federal student loans. The date for mailing the checks for the Navient settlement was July 23, 2024. If you were eligible for a payment, by that time, you should have already received it.
- Camp Lejeune Lawsuit Payout Per Person
Eligibility Criteria for the Navient Settlement Payout
Now, to determine whether you were eligible for the Navient settlement, certain requirements must have been met. These depended on the type of allegations filed against Navient and the type of loan one had.
- Federal Student Loans: The majority of the benefits from the settlement involved federal student loans serviced by Navient.
- Loan type: Relief may be more likely to be available for certain types of federal loans, such as Direct Loans or Federal Family Education Loans.
- Timing: The settlement in question often pertains to borrowers who had issues within a particular time frame, maybe those who were placed in forbearance or who were misled about options that may have been pertinent to their repayment.
- Loan Discharge: Federal student loans lent to borrowers enrolled in at least seven years of IDRP whose loans were not forgiven at the time may have qualified for loan discharge.
- Restitution Payments: Where the borrowers had been overcharged, duped over repayment options, or put into forbearance without their permission, they could be included in restitution payments.
- Forbearance Relief: Borrowers who were placed into forbearance during certain periods of time, possibly due to the COVID-19 pandemic, would have received some type of forbearance relief such as interest forgiveness or a decrease in the balance on their loans.
Navient Settlement Payout Benefits
Several key ways this Navient settlement benefits borrowers include:
Debt Relief
- Partial or Complete Debt Forgiveness: Navient will not collect all or a part of the outstanding balance on their Private Student Loans for some borrowers.
- Debt Relief Value: The total value that comprises this debt relief is around $182.4 million.
Credit Reporting
- Deletion or Update of Trade Lines: Navient will take steps to delete or update trade lines related to the Private Student Loans listed in the Claim Form. This has the added effect of improving credit scores.
Damages Payments
- Settlement Fund: There is a $16 million Settlement Fund available to pay damages claims to eligible borrowers who timely submit and have an approved Claim Form.
- Reimbursement of Payments Made After Bankruptcy: If a borrower is eligible, who has paid on their Private Student Loans post-filing bankruptcy, may seek reimbursement of such payments.
Key Highlights:
- There are mostly benefits available for which borrowers must timely file a valid Claim Form.
- Co-Borrowers: At no instance Navient will reimburse the co-borrowers for the payments made on the Private Student Loans.
- Damages/Post-Discharge Payments: The Claim Form will have a line for the total of all payments credited to the Navient post-discharge date of the borrower.
- For the borrower to receive any refund of damages, they will have to quantify how much of the payments they actually paid themselves.
Payment Distribution for the Navient Settlement
The settlement required that the Navient settlement fund be distributed to borrowers who filed valid Claim Forms, in an amount calculated based on a proportional share of the settlement fund.
Since there were too many claims for all claims to be paid in full with the settlement funds, actual disbursements did not result in 100% of the amounts shown in the “Damages/Post-Discharge Payments” column.
Payments Amounts
- Pro Rata Distribution: This means the settlement fund has been divided such that each successful claimant received a percentage of the total amount they were entitled to.
- Percentage: Since the number of claims had been so large, the pro rata percentage in this settlement is 15.18%.
- Calculation: Each claimant will get 15.18% of the amount of the “Damages” they individually paid on their Claim.
Key Points
- Insufficient Funds: The amount in the settlement fund was not sufficient to pay all damages claimed by eligible borrowers.
- Pro Rata Distribution: The funds available were distributed on a pro rata basis to all eligible claimants.
- Reduced Payment: As a result of the pro rata payment, claimants received less than the full amount reflected in column “Damages/Post-Discharge Payments.”