The national student loan corporation Navient has agreed to forgive $41 million in private loans for Massachusetts student borrowers as part of a $1.85 billion settlement tied to allegations that it misled borrowers into entering costly repayment plans that added to their balances, Attorney General Maura Healey announced Thursday.
Under the terms of the settlement, Massachusetts will receive $6 million, including $2.2 million in restitution for more than 8,300 federal loan borrowers in the state.
Healey has called a 12:30 p.m. press conference on Zoom to discuss the settlement, but shared some of the details online before the briefing.
"Students should not pay for Navient's mistakes," Healey tweeted.
Navient is a national company based in Delaware that services and collects on student loans, managing $300 billion in student loans for more than 12 million borrowers. The company was formed in 2014 when Sallie Mae split into two entities — Sallie Mae Bank and Navient.
Healey said Navient steered student loan borrowers into forbearance agreements that added to their debt instead of counseling them on income-driven repayment plans that would have lowered their monthly payments. The settlement will see $41 million in private loans for 1,523 borrowers in Massachusetts forgiven.
"This settlement brings us one step closer to healing our broken student debt system," Healey said.
As attorney general, Healey has been vocal in her support for student loan forgiveness, joining with state leaders like U.S. Sen. Elizabeth Warren and U.S. Rep. Ayanna Pressley last year in calling for President Joe Biden to forgive up to $50,000 in student loan debt for federal borrowers. Last April, she called the system "fundamentally broken," and said her office has used the legal system to prosecute predatory lenders and tried to help borrowers restructure payment plans, get their loans out of default and resolve billing disputes.