Navient, everybody's favorite student loan servicer has agreed to cancel $1.7 billion in student loan debts. These debts are owed by nearly 66,000 borrowers in 39 different states. The settlement was run thru those state's attorney generals' offices. It makes you wonder what the hell were the attorney generals of the other 11 states doing? The settlement was the result of legal actions that alleged wrongdoing from Navient. The first allegation is that Navient intentionally steered customers into expensive loan modifications when they qualified for money saving income-based repayment plans. This part of the settlement basically equated to 355,000 borrowers getting about $260 each for their trouble.
The second allegation against Navient (and Sallie Mae) is that they pushed loans that were likely to fail on to high-risk borrowers who had little to no ability to repay the loans. These high risk, high interest loans were made in conjunction with for-profit colleges, most of whom have very low graduation rates. The reality is that the student loan business is dirty and all the players involved, from the money lenders to the servicers to the for-profit colleges are crooks. They are just raking in easy money at high interest while the federal government guarantees the entire repayment. Student loans, one time a seemingly good idea, have just turned the entire financial system on its head. Basically, these money lenders have found a way to saddle young adults, and in many cases their parents, into loans that are like mortgages on steroids. The American financial system will not be a fair place to operate for anyone until all student loan debt is cancelled. Only corporate shills and people with a fundamental misunderstanding of our financial system would argue otherwise.