If you are burdened with Sallie Mae student loans, you may be able to have your loans discharged in bankruptcy. Note that in 2014, Sallie Mae created a new company called Navient Corporation to hold its loan portfolio and to operate its loan servicing business. Thus, if you ever had a Sallie Mae loan or had Sallie Mae conduct loan servicing, that loan and servicing, likely, was transferred to Navient. Further, Navient then changed its name in 2021 to Aidvantage. See here.
Whether called a “Sallie Mae” or “Navient” or “Aidvantage” loan, depending on the loan and the circumstances, debtors should contact experienced debt relief attorneys — like that at Guardian Litigation Group. The debts that are eligible for bankruptcy discharge are what are legally called “private student loans.” Unlike “regular” student loans, private loans are not backed by the federal government or other non-for-profit institutions. Thus, the bankruptcy nondischargeability rules for “regular” student loans do not apply to private student loans.
For years, Sallie Mae has been fighting a legal battle claiming that ALL of their loans were “regular” student loans that were not eligible for bankruptcy discharge. However, Sallie Mae/Navient has finally lost those legal battles and has begun to settle certain cases filed by borrowers and federal/state education and financial regulators. For example, as reported here, Navient has just settled a massive consolidated case filed against it by several debtors and 39 state governments. The consolidated case alleged that Sallie Mae engaged in predatory lending practices by making loans to students who would not be able to pay off the loans. According to the allegations, Sallie Mae knew the loans could not be paid off based on the loan amounts and the reasonably foreseeable employment and career prospects of those completing their educational programs at the for-profit schools. There is another lawsuit — still ongoing — against Navient filed by the federal government alleging similar predatory lending practices. That case may be settled soon as well.
With respect to the state case, Navient has agreed to settle the specifics of that case and pay damages to the specific borrowers involved in the case. Navient will also pay about $145 million in fees and expenses to the states that brought the case and will send $260 to all current borrowers. Finally, Navient has agreed to automatically cancel/forgive over $1.7 billion worth of private student loans for approximately 66,000 borrowers. As reported, the cancellation/forgiveness applies to private student loans originated by Sallie Mae between 2002 and 2010 that defaulted and were charged off by Sallie Mae/Navient. Pursuant to the settlement, any remaining balances will be canceled automatically and the affected debtors will receive notice within the next few months. Despite agreeing to settle the case, Sallie Mae/Navient has admitted no wrongdoing.
The important thing for other debtors is the legal precedent now set by this (and other) cases. Private student loans are dischargeable in bankruptcy and, pursuant to pending and future-filed litigation, those private student loans may be eligible for cancellation/forgiveness.
Contact an Experienced Debt Relief and Debtors’ Rights Attorney
For more information, contact the Debtors’ Rights attorneys at Guardian Litigation Group. We can help if you think bankruptcy is the right option. We also provide superior debt settlement services and we can help you determine if any of your student loans might be eligible for bankruptcy discharge or other relief. We have the tools and experience you need. Our mission is to provide unparalleled legal services and support for those being crushed by their debts and harassed by their creditors. We can be reached via our contact page or by phone at (949) 569-9006.