Student Loan Borrowers Eligible for $16 Million in Relief: Who Qualifies

Student loan borrowers have until November 20 to file a claim with Navient as part of a settlement agreement that will transfer $16 million to borrowers who had loans paid to the company even after they had declared bankruptcy.

The student loan financier Navient reached a nearly $200 million settlement in July on a case that alleged the company was collecting debt from borrowers that had been erased during bankruptcy.

The company, whose portfolio of student loans is more than $18 billion, is one of the largest private education loan companies in the U.S.

As part of the settlement, the company agreed to wipe out about $182 million total worth of student debt and also create a fund of $16 million that will pay borrowers who had paid cash to Navient even after they had declared bankruptcy. The company has denied wrongdoing.

"Navient will...establish a Settlement Fund of $16 million to pay damages claims for those Settlement Class Members who submit timely Claim Forms that are approved by the Settlement Administrator," according to frequently asked questions on the settlement website.

Navient told Newsweek in a statement that loans under these programs were originated in the years before the company was formed in 2014.

"Navient has never made loans in these categories or under these programs," the company said. "Navient supports updating bankruptcy law to allow for the dischargeability of all student loans, including federal and private loans, after good faith periods of repayment.

"We currently abide by all relevant bankruptcy rules and regulations and do not attempt to collect on a debt that has been properly discharged by a U.S. bankruptcy court."

The settlement is scheduled for a final approval hearing on December 13 at the U.S. District Court for the Eastern District of New York.

Claim deadline is November 20

People that will receive a portion of the $16 million will have to meet certain qualifications. They would have need to have filed for bankruptcy protection on or after October 17, 2005. Before their bankruptcy filing, they must have been obligated to repay one or more private student debt as a borrower or co-borrower. They also must have been obtained in their bankruptcy case an order of discharge issued by the court and have never "reaffirmed" their student debt.

The debt excludes federal loans, according to the settlement, and the loans are private through Navient.

Those who qualify have until November 20 to file a claim. They can also reach out to the settlement administrator at (866) 848-0808. A final approval hearing will be held on December 13.

Other student loan relief options

The majority of student loans in America are federal loans that total about $1.8 trillion for 44 million borrowers. Over the last few years, President Joe Biden and his administration have worked to provide relief for borrowers and wanted to forgive up to $20,000 of student debt, but the U.S. Supreme Court stopped the effort in June.

The administration has tried different avenues to forgive student debt, including the SAVE plan to help borrowers get on a path toward debt forgiveness more quickly. Interest on loans restarted in September and repayments of the debt resumed last month.

The average student loan payment for households is about $200 to $300 a month, which comes to around 5 percent of the U.S. median salary, but it's a struggle, particularly for low-income Americans. Some borrowers are increasingly pursuing the path of declaring bankruptcy as a way to get student debt removed as a burden.

"With loan forgiveness dead, filing for bankruptcy is now emerging as one of the only options for many low-income Americans to resolve their student loan debt," Jonathan Petts, CEO of the debt consultation nonprofit Upsolve, told Bloomberg.

Do you have a student loan story to share? Newsweek wants to hear from you. Contact us at personalfinance@newsweek.com.