PROVIDENCE – Hundreds of Rhode Islanders with student loans will receive significant debt relief as part of a nationwide billion-dollar settlement with a loan servicer accused of unfair and deceptive practices in originating student loans for more than a decade.
Attorney General Peter F. Neronha announced Thursday that 226 borrowers from around the state will receive about $4.6 million from Navient Corp. in loan debt cancellation. The money received by the state is part of a national $1.85 billion settlement with Navient. Rhode Island was part of a coalition of 39 attorneys general that accused Navient of steering borrowers struggling to repay student loans into costly long-term forbearances instead of counseling them about more-affordable repayment plans.
The attorneys general claimed that the interest accrued due to Navient’s forbearance steering practices was added to the borrowers’ loan balance, which put borrowers further into debt. This has been happening since 2009, the attorneys general said.
Borrowers receiving private loan debt cancellation will get notices from Navient by July, along with refunds of any payments made on canceled private loans after June 30, 2021, Neronha said.
“When a student loan servicer, or any business for that matter, operates as a bad actor and harms Rhode Islanders, this office will step in to protect them,” Neronha said in a statement. “This settlement will directly benefit hundreds of borrowers in Rhode Island with debt cancellation, and thousands more borrowers by ensuring these practices will not happen again.”
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