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Navient, a leading student loan collection company, agreed to pay more than $140 million in other penalties to cancel $1.7 billion in loans from more than 66,000 borrowers across the US and settle allegations of abusive lending practices .

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agreement with 39 State Attorney General Thursday was announced.

Pennsylvania Attorney General Josh Shapiro, “engaged in deceptive and abusive practices, targeted students who knew they would struggle to pay back loans, and were trying to improve their lives through education.” put an undue burden on the people.” who helped lead the talks, said in a statement.

Among other things, he said, Navient misled borrowers who were having trouble making payments, known as long-term forbearance, which caused them to incur even more debt.

Forbearance is when lenders allow borrowers to withhold or reduce payments for a limited amount of time while building their finances. However, interest continues to accrue on the loan and eventually the amount paid over the life of the loan may be higher.

Navient denied having acted illegally, and did not admit to any wrongdoing under the agreement, which is subject to court approval.

“Naviant is relentlessly focused on helping student loan borrowers understand and choose the right payment options to meet their needs,” Chief Legal Officer Mark Helen said in a statement.

In addition to forgiving tens of thousands of loans, Navient will pay off $142.5 million, most of which will go to the approximately 350,000 borrowers who were placed in long-term forbearance.

Also, Navient will need to do more to advise borrowers about their options and explain repayment plans to them.

Massachusetts Attorney General Maura Healy called the agreement “an important step toward addressing our broken student loan repayment system.”

Among those who have benefited is Ashley Hardin, 38, of Seattle. Hardin defaulted on nearly $108,000 in private student loans in 2020 after scrambling for more than a decade to try to pay off a loan he used to attend the Brooks Institute of Photography in California.

His monthly payment was often more than his rent. For a time, Navient agreed to reduce his payments to about $650 a month, but when that period ended, he had to pay more than $1,000 again to pay compound interest.

“It’s a huge weight lifting,” said Hardin, who was unable to pursue a photography career in Seattle and now drives a food truck with her husband. “I can breathe again and feel that I I’m not drowning like I’m not going to get a call tomorrow that they’re suing me for defaults.”

Helena Moon, 34, was accepted into their “dream college” – Howard University – when she was 18. When financial aid and scholarships weren’t enough, he sought private loans and found himself surrounded by phone calls and letters from lenders after graduation. , Moon, who lives in Washington DC, said the experience was also stressful for her mother, who is a co-signer on the loan.

“It’s a step forward in racial equality when you think about the percentage of African-Americans in debt in this country,” she said of the agreement.

Kelly Fehery, 34, of Franklin, Massachusetts, described her experience as a “living nightmare” of using loans to attend an art school that threatened to upset her with lifelong debt.

“The settlement for me will mean that I can finally get my credit back,” she said.

Borrowers whose loans have been canceled will receive a notice from Navient along with a refund of any payments made after mid-2021.

Settlements include Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Delaware, Florida, Georgia, Hawaii, Illinois, 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, Washington, West Virginia and Wisconsin.


AP writer Gene Johnson contributed from Seattle.