Wisconsin student loan borrowers to receive nearly $24 million in relief following settlement

MADISON, Wis. — People in Wisconsin with student loans may be in line to have their debt canceled following a settlement from one of the country’s biggest student loan companies.

Navient agreed Thursday to pay more than $140 million in penalties and cancel about $1.7 billion in debt from 66,000 borrowers across the United States as part of a settlement over claims of abusive and predatory lending practices.

According to Wisconsin Attorney General Josh Kaul, affected borrowers in Wisconsin will be getting more than $23.8 million in relief. Wisconsin was one of 39 attorneys general to join in on the suit, claiming Navient pushed people struggling to pay their student loans into long-term forbearances instead of telling them about the benefits of other repayment plans.

“A student loan servicer cannot be permitted to engage in deceptive and predatory practices that add to the burdens that families face because of student loan debt,” Kaul said. “This resolution provides meaningful relief to many people who were impacted by Navient’s actions.”

Kaul and others argued the forbearances added interest to the borrowers’ balances, putting them in even more debt. They also claimed Navient gave subprime student loans to people attending for-profit schools and colleges with low graduation rates, knowing those people would struggle to repay the loans.

Under the settlement, a total of $1,110,265 in restitution payments will be made to more than 4,165 federal student loan borrowers in Wisconsin, while $22,776,612 in private loans to 953 people will be canceled.

Those receiving a cancellation of their debt will be notified by Navient by July of this year, along with refunds of any payments made on those loans after June 30, 2021. Federal loan borrowers who are eligible for restitution will receive a postcard in the mail this spring. Those payments will average out to about $260 per person.