(NewsNation Now) — One of the nation’s largest student loan providers is canceling $1.7 billion in debt owed by more than 66,000 borrowers across the U.S.
Navient, a major student loan collecting company, agreed to cancel the debt and pay over $140 million in other penalties to settle allegations of abusive lending practices. The $1.85 billion deal with 39 state attorneys general was announced Thursday.
Navient “engaged in deceptive and abusive practices, targeted students who it knew would struggle to pay loans back, and placed an unfair burden on people trying to improve their lives through education,” Pennsylvania Attorney General Josh Shapiro, who helped lead the negotiations, said in a statement
This comes as more Americans are choosing to forgo college and go straight to the workforce for a multitude of reasons, according to the National Student Clearinghouse Research Center. CEO of DegreeSight David Cook said this marks a major shift in the country.
“We know that in about three or four years, the overall total college-going student population is going to decrease by about 15%,” said Cook. “So the fact that we’re already seeing that decline before that demographic shift happens is where I think people are getting a little more concerned that it’s not necessarily just population, it’s also now perception.”
Cook said the perception that you can start a career from your basement or bedroom whether it be on social media or as an entrepreneur is a major cultural shift for younger generations.
“You start seeing students who, unfortunately, are blasted every single day with YouTube, with Instagram, with TikTok. They’re seeing influencers making more than their parents while sitting at home. And so there is that perception now. Is it worth it? What is my path to a successful career? And if colleges cannot answer that question about ROI [return on investment], they’re in trouble.”
However, colleges and universities are responding to try to appeal to more students, in particular with virtual models.
“Now, what that tends to do, though, with any technology shift is you’re now going to see a number of colleges that will grow rapidly that will create better and better offerings,” Cook said.
The Biden administration last month extended a student loan moratorium that has allowed tens of millions of Americans to put off debt payments during the pandemic. Under the action, payments on federal student loans will remain paused through May 1. The policy applies to more than 36 million Americans who have student loans that are held by the federal government. Their collective debt totals more than $1.37 trillion, according to the latest Education Department data.