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    Navient Reaches $120 Million Student Loan Settlement With Consumer Watchdog

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    The company has been banned from servicing federal student loans and must pay $100 million to harmed borrowers, as well as a $20 million penalty.Navient, formerly one of the nation’s largest student loan servicers, reached a $120 million settlement with federal regulators on Thursday to resolve claims that it misled federal student loan borrowers and mishandled their payments for years.The Consumer Financial Protection Bureau said the deal would permanently ban the company from managing federal student loans and require it to pay $100 million in restitution to affected borrowers along with a $20 million penalty.The consumer watchdog’s suit had accused Navient of failing borrowers at every step of repayment: Among other misdeeds, it said the company steered borrowers away from more affordable income-driven repayment plans and into forbearance, which padded its own profits and forced borrowers to pay more than they had to.“For years, Navient’s top executives profited handsomely by exploiting students and taxpayers,” said Rohit Chopra, the director of the consumer agency. “By banning the notorious student loan giant from federal student loan servicing and ensuring the wind down of these operations, the C.F.P.B. will finally put an end to the years of abuse.”During a media call, agency officials said borrowers who were eligible for restitution payments did not need to do anything — the C.F.P.B. would mail checks to “hundreds of thousands” of federal student loan borrowers, after it analyzed which consumers were due payments. It’s unclear how long that will take. (The agency also warned borrowers to beware of scammers who might try to use C.F.P.B. imagery to steal money or private information.)The settlement closes the book on two related legal actions that date back to 2017, when the consumer protection agency and two state attorneys general — later backed by a coalition of attorneys general in 27 other states — sued Navient.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Young Americans Can’t Keep Funding Boomers and Beyond

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      You know the expression “OK, Boomer”? Better said as “Boomer OK.” That’s because the social safety net in the United States is increasingly favoring the old over the young. And this affects our political views and the security of future generations.Younger Americans have valid reason for disgruntlement: Big shifts in income and wealth are dramatically favoring their elders. Under almost every president since 1980, 80 percent of the real growth in domestic spending has gone to Social Security and health care, with Medicare the most expensive health program, according to calculations based on federal data. As a share of GDP, all other domestic outlays combined have declined.Our current tax system also largely does not help Americans, most of whom are younger, pay for their higher education. That wasn’t as big a deal in the 1960s or 1970s, when the average college graduate most likely had little or no student debt. Today, the average taken out each year is about seven times that in 1971, in part because state governments have stripped colleges and universities of funding. This is happening at a time when owning a house is increasingly out of reach. The median price has risen from about 3.5 times median annual income in 1984 to 5.8 times in 2022.So it shouldn’t come as a surprise that today, younger generations are more likely to fall into lower-income classes than their parents or grandparents. Nearly a half century ago, it was the reverse. And in 1989, the median net worth of Americans aged 35 to 44 was nearly 75 percent of those aged 65 to 74. By 2022, that ratio had fallen to one-third.The why is simple. Unlike most other spending, Congress effectively designed Medicare in 1965 and Social Security in the 1970s in such a way that outlays would increase forever faster than our national income. That’s partly because Medicare costs keep rising along with medical prices and new treatments and because Social Security benefits are designed to increase for each new generation along with inflation and wages. And we’re living longer, which means more years of benefits.Today, tax revenues are so committed to mandatory spending, largely for older Americans, and to interest on the national debt (which has quadrupled as a share of G.D.P. since 1980) that few revenues are left for everything else. So, unless we borrow to pay for it, there’s little for education, infrastructure, environment, affordable housing, reducing poverty, or the military.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Where Does Biden’s Student Loan Debt Plan Stand? Here’s What to Know.

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      The Supreme Court refused to allow a key part of President Biden’s student debt plan to move forward. Here’s what’s left of it, and who could still benefit.President Biden’s latest effort to wipe out student loan debt for millions of Americans is in jeopardy.The Supreme Court on Wednesday refused to allow a key component of the policy, known as the SAVE plan, to move forward after an emergency application by the Biden administration.Until Republican-led states sued to block the plan over the summer, SAVE had been the main way for borrowers to apply for loan forgiveness. The program allowed people to make payments based on income and family size; some borrowers ended up having their remaining debt canceled altogether.Other elements of Mr. Biden’s loan forgiveness plan remain in effect for now. And over the course of Mr. Biden’s presidency, his administration has canceled about $167 billion in loans for 4.75 million people, or roughly one in 10 federal loan holders.But Wednesday’s decision leaves millions of Americans in limbo.Here is a look at what the ruling means for borrowers and what happens next:Who was eligible for SAVE?Most people with federal undergraduate or graduate loans could apply for forgiveness under SAVE, which stands for Saving on a Valuable Education.But the amount of relief it provided varied depending on factors such as income and family size. More than eight million people enrolled in the program during the roughly 10 months that it was available, and about 400,000 of them got some amount of debt canceled.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      What Happens to Biden’s Student Loan Repayment Plan After Court Rulings?

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      More than eight million borrowers are enrolled in the income-driven plan known as SAVE. The Education Department is assessing the rulings.President Biden’s new student loan repayment plan was hobbled on Monday after two federal judges in Kansas and Missouri issued separate rulings that temporarily blocked some of the plan’s benefits, leaving questions about its fate.The preliminary injunctions, which suspend parts of the program known as SAVE, leave millions of borrowers in limbo until lawsuits filed by two groups of Republican-led states challenging the legality of the plan are decided.That means the Biden administration cannot reduce borrowers’ monthly bills by as much as half starting July 1, as had been scheduled, and it must pause debt forgiveness to SAVE enrollees. The administration has canceled $5.5 billion in debt for more than 414,000 borrowers through the plan, which opened in August.If you’re among the eight million borrowers making payments through SAVE — the Saving on a Valuable Education plan — you probably have many questions. Here’s what we know so far, though the Education Department has yet to release its official guidance.Let’s back up for a minute. What does SAVE do?Like the income-driven repayment plans that came before it, the SAVE program ties borrowers’ monthly payments to their income and household size. After payments are made for a certain period of years, generally 20 or 25, any remaining debt is canceled. But the SAVE plan — which replaced the Revised Pay as You Earn program, or REPAYE — is more generous than its predecessor plans in several ways.Ask us your questions about the SAVE student loan repayment plan.

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      Parts of Biden’s Student Loan Repayment Plan Blocked by Judges

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      A part of the SAVE plan that would have cut monthly bills for millions of borrowers starting on July 1 was put on hold.Two federal judges in Kansas and Missouri temporarily blocked pieces of the Biden administration’s new student loan repayment plan on Monday in rulings that will have implications for millions of federal borrowers.Borrowers enrolled in the income-driven repayment plan, known as SAVE, are expected to continue to make payments. But those with undergraduate debt will no longer see their payments cut in half starting on July 1, a huge disappointment for borrowers who may have been counting on that relief.The separate preliminary injunctions on Monday are tied to lawsuits filed this year by two groups of Republican-led states seeking to upend the SAVE program, a centerpiece of President Biden’s agenda to provide relief to student borrowers. Many of the program’s challengers are the same ones that filed suit against Mr. Biden’s $400 million debt-cancellation plan, which the Supreme Court struck down last June.“All of this is an absolute mess for borrowers, and it’s pretty shocking that state public officials asked the courts to prevent the Biden administration from offering more affordable loan payments to their residents at time when so many Americans are struggling with high prices,” said Abby Shafroth, co-director of advocacy at the National Consumer Law Center. “It’s a pretty cynical ploy in an election year to stop the current president from being able to lower prices for working and middle-class Americans.”Eleven states led by Kansas filed a lawsuit challenging the SAVE program in late March in U.S. District Court for the District of Kansas. The next month, Missouri and six other states sued in U.S. District Court for the Eastern District of Missouri. Both suits argued that the administration had again exceeded its authority, and that the repayment plan was a backhanded attempt to wipe debts clean.The SAVE program, which has enrolled eight million borrowers since it opened in August, isn’t a new idea. It’s based on a roughly 30-year-old design that ties monthly payments to a borrower’s income and household size. But SAVE has more generous terms than previous plans and a heftier price tag. More than four million borrowers qualify for a $0 monthly payment.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      There’s a Program to Cancel Private Student Debt. Most Don’t Know About It.

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      More than a million borrowers who were defrauded by for-profit schools have had billions of dollars in federal student loans eliminated through a government aid program. But people with private loans have generally been excluded from any relief — until recently.Navient, a large owner of private student loan debt, has created, but not publicized, a program that allows borrowers to apply to have their loans forgiven. Some who succeeded have jubilantly shared their stories in chat groups and other forums.“I cried, a lot,” said Danielle Maynard, who recently received notice from Navient that nearly $40,000 in private loans she owed for her studies at the New England Institute of Art in Brookline, Mass., would be wiped out.Navient, based in Wilmington, Del., has not publicized the discharge program that helped Ms. Maynard. Other borrowers have complained on social media about difficulties getting an application form. When asked about the program and the criticisms, a company spokesman said, “Borrowers may contact us at any time, and our advocates can assist.”So a nonprofit group of lawyers has stepped in ease the process: On Thursday, the Project on Predatory Student Lending, an advocacy group in Boston, published Navient’s application form and an instruction guide for borrowers with private loans who are seeking relief on the grounds that their school lied to them.“We want to level the playing field and let people know, instead of having it be this closely held secret,” said Eileen Connor, the group’s director.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Biden Cancels $6.1 Billion in Debt for Former Art Institute Students

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      The announcement covers 317,000 former students and marks another step in the administration’s student loan relief efforts.The Biden administration on Wednesday canceled more than $6 billion in student debt for 317,000 people who attended the Art Institutes, a now-defunct network of for-profit colleges that President Biden said “knowingly misled” students.After a review of lawsuits brought by state attorneys general against the schools and their parent company, Education Management Corporation, the Education Department found that the Art Institutes falsified job placement figures in advertisements and misled prospective students with inflated salary expectations.In one case the department highlighted, an Art Institute campus in Florida appeared to have included the tennis star Serena Williams’s annual income in its graduate salary projections after she had attended classes there.“This institution falsified data, knowingly misled students and cheated borrowers into taking on mountains of debt without leading to promising career prospects at the end of their studies,” President Biden said in a statement.He also took a swipe at former President Donald J. Trump, whom he accused of ignoring the influence of predatory for-profit schools on students seeking what they believed were meaningful academic credentials.“While my predecessor looked the other way when colleges defrauded students and borrowers, I promised to take this on directly to provide borrowers with the relief they need and deserve,” Mr. Biden said.The president’s decision to cancel the student debt was another step in his pursuit of student loan forgiveness in the year since the Supreme Court struck down a far more ambitious plan to wipe out more than $400 billion in debt.Mr. Biden said last month that he would make another attempt at large-scale debt forgiveness for more than 25 million people, despite opposition from Republicans, who say it would be unfair to borrowers who struggled to pay off their student debt without assistance.In the meantime, the administration has forgiven about $160 billion in debt for 4.6 million borrowers by fixing and streamlining existing programs that have been plagued by bureaucratic and other problems for years.The action covers students who attended Art Institute schools between Jan. 1, 2004, and Oct. 16, 2017. The department said borrowers would be notified starting on Wednesday that they had been approved and would see their debt canceled automatically.Forgiving federal student loans for borrowers who the administration has determined were preyed on by their schools has emerged as one part of the administration’s student debt relief strategy, using its authority under an existing program known as borrower defense to repayment. To date, the administration has approved $28.7 billion in debt forgiveness for some 1.6 million borrowers whose institutions engaged in misleading practices or shut down.“In addition to providing critical relief to students, we need to hold wrongdoers accountable — otherwise, executives will continue to exploit students for their own benefit,” said Aaron Ament, the president of the National Student Legal Defense Network, which has represented former Art Institute students since 2018. More

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      $7.4 Billion More in Student Loans Are Canceled, Biden Administration Says

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      The announcement is the latest in a piecemeal approach the White House is using to target more specific subsets of borrowers.The Biden administration announced an additional $7.4 billion in student loan cancellations for some 277,000 borrowers on Friday, building on plans announced earlier this week to provide debt relief for millions of borrowers by the fall if new rules the White House has put forward hold.The latest round of relief reflects a strategy the White House has embraced by taking smaller, targeted actions for subsets of borrowers that it hopes will add up to a significant result, after a larger plan to wipe out more than $400 billion in debt was struck down by the Supreme Court last year.It also comes as President Biden aims to shore up support with young voters who may be disproportionately affected by soaring education costs, but who may be drifting away over his policy on Israel and the war in Gaza.Taken together with previous actions, the announcement on Friday brought the total to $153 billion in debt forgiven, touching around 4.3 million borrowers so far, the administration said. The administration hopes to forgive some or all loans held by some 30 million borrowers total. The administration said the 277,000 people it identified would be notified by email on Friday.“We’ve approved help for roughly one out of 10 of the 43 million Americans who have federal student loans,” Miguel A. Cardona, the education secretary, told reporters ahead of the announcement.The new round of cancellations involves three categories of borrowers who qualified under existing programs, with the bulk of the forgiveness going to around 207,000 people who borrowed relatively small amounts — $12,000 or less — and were enrolled in the administration’s income-driven repayment plan, known as SAVE.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      What to Know About Biden’s New Student Debt Relief Plan

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      The proposal would affect nearly 30 million people and would target groups that have had hardships in repaying their loans.President Biden announced a large-scale effort to help pay off federal student loans for more than 20 million borrowers.Tom Brenner for The New York TimesPresident Biden released details on Monday of his new student loan debt forgiveness plan for nearly 30 million borrowers.The proposal still needs to be finalized and will have to withstand expected legal challenges, like the ones that doomed Mr. Biden’s first attempt to wipe out student debt on a large scale last year.Biden administration officials said they could begin handing out some of the debt relief — including the canceling of up to $20,000 in interest — as soon as this fall if the new effort moves forward after the required, monthslong comment period.Here’s what is known so far about the program:Who would benefit from the new plan?The plan would reduce payments for 25 million borrowers and erase all debt for more than four million Americans. Altogether, 10 million borrowers would see debt relief of $5,000 or more, officials said.The groups affected include:— Borrowers whose loan balances have ballooned because of interest would have up to $20,000 of their interest balance canceled. The plan would waive the entire interest balance for borrowers considered “low- and middle-income” who are enrolled in the administration’s income-driven repayment plans.The interest forgiveness would be a one-time benefit, but would be the largest relief valve in the plan. The administration estimates that of the 25 million borrowers that could see relief under this waiver, 23 million would see their entire interest balance wiped out.— Borrowers who are eligible for, but have not yet applied for, loan forgiveness under existing programs like Public Service Loan Forgiveness or the administration’s new repayment program, called SAVE, would have their debts automatically canceled.— Borrowers with undergraduate student debt who started repaying their loans more than 20 years ago, and graduate students who started paying their debt 25 or more years ago, would have their debts canceled.— Borrowers who enrolled in programs or colleges that lost federal funding because they cheated or defrauded students would have their debts waived. Students who attended institutions or programs that left them with mounds of debt but bleak earning or job prospects would also be eligible for relief.— Borrowers who are experiencing “hardship” paying back their loans because of medical or child care costs would also be eligible for some type of relief. The administration has not yet determined how these borrowers would be identified, but is considering automatic forgiveness for those at risk of defaulting.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More