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Attorney General William Tong


Attorney General Tong, Consumer Protection Commissioner Seagull, Banking Commissioner Perez Announce $1.85 Billion Settlement with Student Loan Servicer Navient

Thousands of Connecticut Borrowers to Receive Loan Relief and Restitution

(Hartford, CT) - Attorney General William Tong, Consumer Protection Commissioner Michelle H. Seagull and Banking Commissioner Jorge Perez announced today a $1.85 billion settlement with student loan servicer Navient that will direct millions in debt relief and restitution to thousands of Connecticut borrowers.

This settlement, joined by a coalition of 39 attorneys general, resolves allegations of widespread unfair and deceptive student loan servicing practices and abuses in originating predatory student loans. States claimed that since 2009, despite vowing to help borrowers find the best repayment options for them, Navient steered struggling student loan borrowers into costly long-term forbearances and away from more affordable income-driven repayment plans.

In Connecticut, 1,339 borrowers will receive $19 million in direct private loan debt relief. Additionally, 4,875 borrowers will receive nearly $1.3 million in restitution. The State will receive $141,240 in restitution to be deposited into the general fund.

“Navient steered borrowers to costly payment plans, and away from reasonable and affordable options and programs. Their predatory loans left thousands of Connecticut families saddled with unaffordable debt. This settlement will send millions of dollars directly to thousands of Connecticut borrowers who were deceived by Navient’s abusive practices,” said Attorney General Tong. “This is a massive victory for borrowers, but there is still much work ahead to address the crushing financial burden of student loan debt. Connecticut families owe billions of dollars in student loans, an insurmountable barrier for many looking to own their own home, start a family, or grow a business. I am committed to continuing to work alongside my fellow attorneys general, and with state and federal officials, to address this financial crisis and ensure affordable education access for all.”

“Graduating and earning a college degree should be an exciting milestone, but for many people that milestone became a devastating and costly burden,” said DCP Commissioner Michelle Seagull. “Thank you to Attorney General Tong for his persistence in this case, which will have a direct impact in holding student loan companies accountable for the promises they make to borrowers. We know this settlement will help many people who entered into costly loan agreements they are still struggling to pay off.”

I would like to thank Attorney General Tong for his leadership on this case. Given the Department’s own recent action against Navient, this underscores the Lamont administration’s commitment to protect students and their families and how important it is to have dedicated partners in this mission. The Department maintains its steadfast commitment to hold these companies accountable when they violate our laws at the expense of Connecticut borrowers,” said Banking Commissioner Jorge Perez.

Attorney General Tong filed the settlement as a proposed Stipulated Judgment and Complaint today in Hartford Superior Court. The settlement will require court approval.

According to the attorneys general, the interest that accrued because of Navient’s forbearance steering practices was added to the borrowers’ loan balances, pushing borrowers further in debt. Had the company instead provided borrowers with the help it promised, income-driven repayment plans could have potentially reduced payments to as low as $0 per month, provided interest subsidies, and/or helped attain forgiveness of any remaining balance after 20-25 years of qualifying payments (or 10 years for borrowers qualified under the Public Service Loan Forgiveness Program).

Navient also allegedly originated predatory subprime private loans to students attending for-profit schools and colleges with low graduation rates, even though it knew that a very high percentage of such borrowers would be unable to repay the loans. Navient allegedly made these risky subprime loans as “an inducement to get schools to use Navient as a preferred lender” for highly profitable federal and “prime” private loans, without regard for borrowers and their families, many of whom were unknowingly ensnared in debts they could never repay.

Under the terms of the settlement, Navient will cancel the remaining balance on $1.7 billion in subprime private student loan balances owed by more than 66,000 borrowers nationwide. In addition, Navient will pay $142.5 million to the attorneys general. A total of $95 million in restitution payments of about $260 each will be distributed to approximately 350,000 federal loan borrowers who were placed in certain types of long-term forbearances. Borrowers who will receive restitution or debt cancellation span all generations: Navient’s harmful conduct impacted everyone from students who enrolled in colleges and universities immediately after high school to mid-career students who dropped out after enrolling in a for-profit school in the early to mid-2000s.

The settlement includes conduct reforms that require Navient to explain the benefits of income-driven repayment plans and to offer to estimate income-driven payment amounts before placing borrowers into optional forbearances. Additionally, Navient must train specialists who will advise distressed borrowers concerning alternative repayment options and counsel public service workers concerning Public Service Loan Forgiveness (PSLF) and related programs. The conduct reforms imposed by the settlement include prohibitions on compensating customer service agents in a manner that incentivizes them to minimize time spent counseling borrowers.

The settlement also requires Navient to notify borrowers about the U.S. Department of Education’s recently announced PSLF limited waiver opportunity, which temporarily offers millions of qualifying public service workers the chance to have previously nonqualifying repayment periods counted toward loan forgiveness—provided that they consolidate into the Direct Loan Program and file employment certifications by October 31, 2022.

As a result of today’s settlement, borrowers receiving private loan debt cancellation will receive a notice from Navient by July 2022, along with refunds of any payments made on the cancelled private loans after June 30, 2021. Federal loan borrowers who are eligible for a restitution payment of approximately $260 will receive a postcard in the mail from the settlement administrator later this spring.

Federal loan borrowers who qualify for relief under this settlement do not need to take any action except update or create their account to ensure that the U.S. Department of Education has their current address. For more information, visit

Until recently, Navient had a contract to service federal student loans owned by the U.S. Department of Education, including a large portfolio of loans made under the Direct Loan Program and a smaller portfolio of loans made under the Federal Family Education Loan (FFEL) program. On October 20, 2021, the U.S. Department of Education announced the transfer of this contract from Navient to Aidvantage, a division of Maximus Federal Services, Inc. However, Navient will continue to service federal student loans made under the FFEL Program that are owned by private lenders, as well as non-federal private student loans.

Today’s settlement was led by Pennsylvania, Washington, Illinois, Massachusetts, and California, and was joined by attorneys general in Arizona, Arkansas, Colorado, Connecticut, the District of Columbia, Delaware, Florida, Georgia, Hawaii, 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, West Virginia, and Wisconsin.

Assistant Attorney General John Langmaid and Deputy Associate Attorney General Joe Chambers, Chief of the Finance and Revenue Services Section assisted the attorney general in this matter.

Additional Resources Regarding Student Loan Options

The U.S. Department of Education Office of Federal Student Aid (“FSA”) provides information and guidance regarding federal student loans, including applying for federal student loans and the repayment and forgiveness process. Click here to submit a complaint or inquiry to FSA’s student loan ombudsman group.

The Consumer Financial Protection Bureau (“CFPB”) provides tools and resources helpful to those preparing for college or who are repaying student loans. Click here to submit a complaint or inquiry to the CFPB.

The Connecticut Department of Banking investigates complaints regarding student loan servicers, including alleged violations of Connecticut laws relating to student loan servicing, and provides helpful resources for student loan borrowers. Click here to submit a complaint or inquiry to the Department.

Consumers may also submit complaints to the Office of the Attorney General at

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