Proposed settlements were filed Thursday in courts around the country.
The agreement, if approved by a judge, cancels
The proposed settlements were filed in court in each participating state and will require court approval.
Here is a look at the details and who is supposed to benefit:
WHO DOES THIS AFFECT?
Borrowers who will receive restitution or debt cancellation span all generations, officials say. They include students who went to colleges or universities right after high school and mid-career students who dropped out after enrolling.
The loans were taken out primarily between 2002 to 2014, officials say. Private loans often came with a variable, rather than fixed, interest rate and a shorter window than federal student loans to make payments before defaulting.
Many borrowers who were struggling to make payments were not told about a federal “income driven” program that could lower their payments. Others were not told about a federal program that forgives some debt for public-sector workers.
HOW WILL YOU FIND OUT IF YOU BENEFIT?
Borrowers who will see their private loan debt canceled will be notified by
Borrowers who are eligible for a restitution payment of approximately
Federal loan borrowers who qualify need to update their studentaid.gov account, or create one, to ensure that the
More details are here.
WHO IS ELIGIBLE FOR RESTITUTION?
State officials say there are various situations that make borrowers eligible.
For instance, they need to have lived in a state participating in the settlement as of
Forbearance is when lenders allow borrowers to pause or reduce payments for a limited time while they improve their finances. However, interest on the loan continues to accrue and can ultimately cause the amount paid over the life of the loan to grow.
WHO IS ELIGIBLE FOR DEBT CANCELATION?
Borrowers who primarily will see their debt canceled took out private subprime student loans through
For instance, in
WHAT ARE SOME EXAMPLES?
From
“To say that this company tormented me is an understatement,” Miller said.
The company hounded her, her employers and her family members with phone calls, gave her misleading information about relief programs and pushed her into forbearance “that I knew wasn't really the right choice,” she said.
“I tried my best to make ends meet, with my own financial issues going on and there was just no solution, they were never really willing to work with me,” Miller said.
Ultimately, it destroyed her credit, she said.
The lawsuit filed by
One student who enrolled in a master’s degree program did not complete the degree and struggled to repay the loan, it said.
Despite demonstrating that financial hardship to
In another example, a public-sector worker qualified for a federal program that forgives debt, but
Seven years later — in 2014 — she learned she had indeed been eligible, meaning she had made seven years of payments that didn't count toward the total because she didn't enroll in 2007, the lawsuit said.
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