There’s a program to cancel private student debt. Most don’t know about it.
More than 1 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. Other borrowers have complained on social media about difficulties getting an application form.
When asked about the program and the criticisms, a company spokesperson said, “Borrowers may contact us at any time, and our advocates can assist.”
A nonprofit group of lawyers has stepped in to 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.
Navient’s new program — which it calls a “school misconduct discharge” — is something of a private parallel to a federal program known as “borrower defense to repayment,” which allows those who were seriously misled by their schools to have their federal student loans eliminated.
For nearly a decade, in the early 2000s, Navient struck deals with for-profit schools to issue private loans to their students.
Lawsuits from state attorneys general later accused Navient of making those loans knowing that most would never be repaid. Many schools indemnified Navient for the private loans, agreeing to defray the company’s loss if the loans defaulted.
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