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By Jonathan Stempel and Chris Prentice
(Reuters) – U.S. student loan giant Navient Corp will cancel $1.7 billion in debt owed by 66,000 borrowers and recompense 350,000 others to resolve allegations by 38 U.S. states and the District of Columbia that the company preyed on customers and steered many to costly repayment plans.
Thursday’s nationwide settlement ends probes and lawsuits into Navient practices dating back to 2009, when the company was known as Sallie Mae.
Navient will pay an additional $142.5 million to the states, including $95 million to harmed borrowers, making the total settlement about $1.85 billion, according to the states.
In a statement, Navient denied breaking any laws or causing harm to borrowers, saying the matter was “based on unfounded claims.”
The states alleged Navient steered struggling student loan borrowers into costly long-term repayment suspensions instead of counseling them on the benefits of more affordable income-driven repayment plans, the states said.
The firm also made predatory loans to private borrowers they knew would struggle to repay them, they said.
Pennsylvania Attorney General Josh Shapiro, whose state was among those to settle, said Navient impeded thousands of borrowers from buying homes, starting…
