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There’s a brand new student loan forgiveness option for borrowers with private student debt. A significant national private student loan lender has quietly released a brand new application that gives a limited but very realistic path to potential relief.
Typically, only federal student loans are eligible for debt relief. In fact, the entire debt relief initiatives the Biden administration is currently implementing are only available for federally funded or federally assisted student loans. Private student borrowers, who make up a comparatively small but not insignificant share of total student debt, are excluded from this relief.
However, Navient, one in all the nation’s largest private student loan lenders, has a brand new private student loan debt forgiveness application. Here are details on who can qualify and what borrowers can expect.
Student loan forgiveness is frequently limited to federal debt
According to recent data from the Department of Education, the Biden administration has forgiven nearly $170 billion in student loans, benefiting at the very least 4.75 million borrowers.
However, this comprehensive debt forgiveness only applied to federal student loans. The administration focused on expanding relief under several existing federal loan forgiveness programs, reminiscent of income-based repayment, public service loan forgiveness, and disability relief. The results were unprecedented—but only federal student loans are eligible.
Purely private student loans are usually not eligible for federal repayment and forgiveness programs and can’t be consolidated or converted right into a federal loan. Private loans are usually not created or funded by Congress and are usually not subject to executive authority like federal student loans are, so President Biden has few legal options to supply relief to personal borrowers. Typically, some of these loans have more limited repayment options and may have much higher rates of interest than their federal counterparts.
New application for personal student loan forgiveness for defrauded borrowers
Without any formal announcement or statement, Navient has released an application for personal student loan forgiveness for borrowers who’ve been defrauded by their schools.
“Navient has begun quietly sending its new application to a select few borrowers,” said the Project on Predatory Student Lending, a legal and advocacy organization for student loan borrowers. “The application allows borrowers who have experienced misconduct at their school to directly apply for private loan relief, which represents a long-overdue recognition of borrowers’ rights.”
The Application appears to be very just like Borrower Defense to Repayment, a program under federal law that permits borrowers to hunt forgiveness of their federal student debt if their school has made false statements or false guarantees about central elements of the underlying educational program. These may include lies, omissions, or exaggerations about admissions selectivity, profession services, potential earned income, accreditation, or transferability of credits to a different institution.
Navient has not publicly announced the provision of the brand new private student loan forgiveness application, so the Project on Predatory Student Lending took steps last week to make the general public aware of it.
“Today, we are making a concerted effort to highlight the options for repayment for student loan debtors who have been defrauded by their schools and who have borrowed from private borrowers. Private student loans have always included basic consumer protections such as borrower protections, yet lenders and servicers have stymied borrowers’ efforts to implement these individually or en masse,” said Eileen Connor, president and chief executive officer of PPSL, in an announcement. “This Navient filing is an opportunity for borrowers who have experienced misconduct to finally receive relief for their private loans and is a direct result of our customers’ persistence.”
Senator Elizabeth Warren (D-Mass.) mutedly praised Navient for releasing the applying, but criticized the corporate for not making the method clear or easy for those harmed by school misconduct. “Navient has admitted responsibility for canceling its usurious loans, but has set up a cancellation process that is incredibly confusing for borrowers,” she said in an announcement. “I will not allow Navient to get away with defrauding defrauded student borrowers of the compensation they deserve.”
Relief from latest application for personal student loan forgiveness is restricted but very real
Borrowers must be aware that the power to acquire private student loan forgiveness is kind of limited. Private student loans are still not eligible for forgiveness if the borrower is employed by a public institution, repays their loans on an income basis, or is experiencing financial hardship (except within the case of bankruptcy).
Navient’s debt relief program is specifically designed for borrowers who claim their school is guilty of certain sorts of misconduct. Other problems a borrower can have, reminiscent of difficulty making their payments, are usually not grounds for debt relief under this program. Unlike the same federal Borrower Defense to Repayment program, the Navient application requires borrowers to incorporate supporting documentation with their application.
And that application is barely available to borrowers with Navient private student loans. Other private student loan lenders do not need that application option. “PPSL is not aware of a similar private student loan termination process for private student loan holders other than Navient,” the group said in its statement. Still, PPSL encouraged borrowers with other sorts of private student loans to contact their servicer.
Nevertheless, the brand new program appears to be legitimate and does indeed provide relief. According to the PPSL and the New York TimesAt least some borrowers have had student loan forgiveness achieved through Navient’s latest application process, sometimes just weeks after applying. In contrast, borrowers under the federal Borrower Defense to Repayment program can take years to receive a call.
Further approvals for the forgiveness of presidency student loans are pending
Navient’s latest path to personal student loan forgiveness is independent of the many federal student loan forgiveness initiatives being implemented by the Biden administration.
Last month, the federal government approved one other $7.7 billion in student loan forgiveness for 160,000 borrowers. Borrowers received relief through the PSLF program, the IDR account adjustment (the federal government recently prolonged a key deadline for this program to the top of June), and the brand new SAVE plan.
The Biden administration can also be working on a brand new mass student loan forgiveness program that might provide partial or full debt relief to greater than 25 million federal loan borrowers. The latest program is predicted to roll out in September or October, but will likely face legal challenges.
