Private Student Loan Lender Offers Debt Cancellation, But Borrowers Have to Ask

Students walk past a graduation cap and stole at George Washington University in Washington on May 2, 2022. Stefani Reynolds/AFP via Getty Images

While debates over President Joe Biden’s attempts to cancel federal student loan debt capture national attention, a little-known program directed by a one-time leading private student loan company is providing relief for eligible borrowers.

Navient, once a major servicer of private and federal student loans, stopped managing federal student loans in 2021. By that point, all federal loans in the Navient portfolio were transferred to another servicer, Aidvantage.

Earlier this year, Navient announced a plan to withdraw from the student loan servicing market. But before the company completely offloads the servicing of its last remaining student loan portfolio, it quietly opened a new loan forgiveness application for private student loan borrowers.

Without any formal announcement or statement, Navient has released a private student loan forgiveness application for those seeking relief on the grounds that they have been defrauded by their schools.

“Navient began quietly sending its new application to a select few borrowers,” said the Project on Predatory Student Lending (PPSL), a legal group advocating on behalf of student loan borrowers, in a statement last week urging eligible borrowers to take advantage of the new initiative.

“We’re spreading the word to ensure that impacted borrowers—not just those that Navient hand picks—know that there is a path to relief,” Eileen Connor, president of the group, said in a statement. “We’re also calling on Navient and all lenders to do the right thing and cancel all student loans outright where there is evidence of fraud.”

According to the PPSL, borrowers with private loans who believe they are eligible for relief should ask Navient for a School Misconduct Discharge Application by contacting Navient’s Office of the Customer Advocate or sending an email to [email protected].

The Navient 12-page application is similar to that for Borrower Defense to Repayment, a federal debt relief program that allows borrowers to request a discharge of federal student debt if the school made false promises or misleading presentations about their education that led them to enroll and take out loans. These can include distortions of facts about the school’s education programs, financial charges, and graduates’ employment outcomes.

Unlike the similar federal Borrower Defense to Repayment program, however, the Navient application asks borrowers to submit supporting documentation along with their application.

Completed applications can be submitted to the same email address, according to the PPSL guidance. The group further advised that, in the case of Navient refusing to provide the application or not responding to the application within 30 days, borrowers should submit a complaint to the Consumer Financial Protection Bureau.

“The application allows borrowers who experienced misconduct at their school to apply directly for discharge of private loans, marking a long overdue recognition of borrower rights,” the group said.

Sen. Elizabeth Warren (D-Mass.), an outspoken advocate for various forms of student loan forgiveness, criticized the company for not making the process easier for eligible borrowers.

“Navient helped shady for-profit schools trick students into taking on student debt. Now, they’ve admitted they should cancel this debt but set up a process for cancellation that’s wildly confusing,” she wrote on Monday in a post on X. “I won’t let Navient get away with cheating defrauded borrowers out of relief.”

This private student loan forgiveness opportunity is limited to borrowers with Navient private student loans. The PPSL said it is not aware of any similar private student loan cancellation process for private student loan holders besides Navient.

As for now, purely private student loans are ineligible for federal student loan repayment and forgiveness programs, and they can’t be consolidated or converted into a federal loan. The Biden administration, which has been working to provide large-scale cancellation of federal student loan debt, is unable to offer the same to private loan borrowers, since private loans aren’t established or funded by Congress and are not subject to executive authority in the same way their federal counterparts are.

By the end of May, the Biden administration authorized the discharge of about $170 billion in student loan debt, according to the most recent figures from the U.S. Department of Education. The sweeping debt cancellation covered at least 4.75 million borrowers who held federal student loans.