Attorney General Bonta Announces Multistate Settlement Against Student Loan Servicer Navient

Thursday, January 13, 2022
Contact: (916) 210-6000,

Settlement includes $95 million in nationwide restitution for federal student loan borrowers and additional private student loan debt cancellation 

OAKLAND – California Attorney General Rob Bonta today announced a multistate settlement against Navient, one of the largest student loan servicers in the country, to resolve allegations of misconduct in the servicing and collection of federal student loans. The settlement includes $95 million in restitution for student loan borrowers and $1.7 billion in private student loan debt cancellation, including $11.5 million in direct restitution and approximately $261 million in debt cancellation for California borrowers. Many of these borrowers took out private student loans to attend exploitative for-profit schools with low graduation and job-placement rates. As part of the settlement, Navient will also be required to comply with significant injunctive terms governing its student loan servicing. 

“Today’s settlement is a victory for student loan borrowers in California and in our sister states who were exploited by Navient and trapped by poor servicing conduct into expensive loans that they couldn't afford,” said Attorney General Bonta. “Navient has been one the worst actors in the student loan servicing market, and this settlement is a step toward accountability, providing direct relief for many of our most vulnerable student borrowers. The broader fight, however, is far from over. There is a $1.7 trillion student loan debt crisis in this country – and we need decisive action from Congress and the Department of Education to solve it."

In June 2018, the California Attorney General’s Office filed a lawsuit alleging that Navient violated California's Unfair Competition Law and False Advertising Law by steering vulnerable borrowers into costly forbearances and failing to advise them on the benefits of income-driven repayment programs, among other claims. 

Today’s settlement resolves these allegations and requires Navient to make $95 million in restitution payments of about $260 each to approximately 357,000 harmed consumers, including 43,000 Californians. Navient will also cancel more than $1.7 billion in subprime private student loans owed by approximately 66,000 borrowers nationwide. Californians will receive around $261 million of that debt cancellation, going to approximately 7,400 borrowers. Borrowers who will receive restitution or forgiveness 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.

Consumers do not need to take any action to receive the benefits required under the settlement. Consumers receiving private loan debt cancellation will receive a notice from Navient, and they will receive refunds of any payments made after June 30, 2021. Consumers who are eligible for a restitution payment will receive a postcard in the mail from the Attorney General’s settlement administrator in spring 2022. Consumers can find more information about the settlement by visiting

Today’s settlement against Navient also includes substantial injunctive terms to prevent future misconduct. Specifically, Navient must:

  • Ensure that call agents discuss the benefits of income-driven repayment with all borrowers seeking to lower or stop their payments;
  • Create a new cadre of repayment specialists trained to advise at-risk borrowers;
  • Stop compensating call agents in a manner that encourages them to handle calls quickly, and instead ensure agents give thorough and accurate information to borrowers;
  • Implement significant changes to its payment-processing procedures that will benefit borrowers;
  • Limit or reduce certain fees for late payments or entering forbearances; and
  • Improve its billing statements and other communications to better inform borrowers of their rights and obligations.  

Navient must also notify borrowers of the Department of Education’s important changes to the Public Service Loan Forgiveness (PSLF) program, which offers millions of qualifying public servants a waiver that may count past payments, or previously non-qualifying periods of repayment, towards loan forgiveness. Attorney General Bonta encourages all Californians working in the government or non-profit sectors to review the PSLF website to determine whether they might qualify for loan forgiveness. Borrowers seeking loan forgiveness under the Department of Education’s recent changes must take action by October 31, 2022.

Attorney General Bonta is committed to holding predatory actors accountable and protecting California’s student loan borrowers. Last month, trial concluded in Attorney General Bonta’s lawsuit against Ashford University, an online for-profit school, and its parent company Zovio, for engaging in false advertising and unlawful business practices. The same month, Attorney General Bonta announced the successful resolution of litigation against the U.S. Department of Education (ED) after the Biden Administration committed to fixing the broken Public Service Loan Forgiveness and Temporary Expanded Public Service Loan Forgiveness programs. Attorney General Bonta is also involved in several ongoing lawsuits against ED relating to its failure to discharge the loans of former students from for-profit and now-defunct Corinthian Colleges, its unlawful repeal and replacement of the 2016 “borrower defense” regulations, and its effort to ease oversight and accountability on for-profit colleges at the expense of students and taxpayers.

Attorney General Bonta joins the attorneys general of Arizona, Arkansas, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Iowa, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, Washington, West Virginia, and Wisconsin in the settlement.

A copy of the settlement can be found here

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