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Banking, New Castle County, News, Technology

Navient settles multistate loan cases for $1.85B

Jacob Owens January 13, 2022

WILMINGTON – The student loan servicer Navient reached a landmark $1.85 billion settlement with three-quarters of the nation’s attorneys general over cases in which it was accused of steering customers toward more costly repayment plans ...

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Health Care, Legal Services, News

Delaware joins multistate lawsuit on generic pharmaceutical price fixing

Alex Vuocolo May 16, 2019

Attorney General Kathy Jennings has joined 42 states and Puerto Rico in a lawsuit against Teva Pharmaceuticals and 19 of the nation’s largest generic drug manufacturers alleging a broad conspiracy to artificially inflate and manipulate ...

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Government, Legal Services, News

Former chief prosecutor files to run for attorney general

Alex Vuocolo April 10, 2018

(AP) — Former state prosecutor Kathy Jennings has officially entered the race for Delaware attorney general, setting up a Democratic primary contest in September. The 65-year-old Jennings filed campaign papers with the state election commission ...

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Government, News, People

Jennings quits county to run for A.G.

Alex Vuocolo January 8, 2018

Kathy Jennings, chief administrative officer for New Castle County, has resigned her post to run for attorney general. “I expect, in the weeks ahead, to formally announce that I am running for attorney general, because ...

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Student loan firm faces shareholder suit over drop in value

Alex Vuocolo December 5, 2017

(AP) — The Delaware-based student loan company Navient is facing a shareholder lawsuit over its declining value. The News Journal in Wilmington reported Monday that some shareholders claim the company withheld information about its subprime ...

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Navient has settled cases regarding its loan practices in 38 states and Washington, D.C., for $1.85 billion. | DBT PHOTO BY JACOB OWENS[/caption] WILMINGTON – The student loan servicer Navient reached a landmark $1.85 billion settlement with three-quarters of the nation’s attorneys general over cases in which it was accused of steering customers toward more costly repayment plans and targeting for-profit college students with “predatory” subprime loans. Under the terms of the settlement, Navient will cancel the remaining balance on nearly $1.7 billion in subprime private student loan balances owed by nearly 66,000 borrowers nationwide, according to a Thursday announcement by a coalition of 39 attorneys general, including Delaware Attorney General Kathy Jennings. In addition, $95 million in restitution payments of about $260 each will be distributed to approximately 350,000 federal loan borrowers who were placed in certain types of long-term forbearances. Of the settlement, Delaware will receive a total of $400,000 in restitution payments for 1,528 federal loan borrowers. Additionally, 145 Delaware borrowers will receive nearly $4.8 million in private loan debt cancellation. “Navient repeatedly and deliberately put profits ahead of its borrowers – it 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 was among the first to charge Navient, said in a statement. “Today’s settlement corrects Navient’s past behavior, provides much needed relief to Pennsylvania borrowers, and puts in place safeguards to ensure this company never preys on student loan borrowers again.” Navient, an education loan servicing giant headquartered in Wilmington’s Riverfront with a state workforce of about 350, was spun out from education loan originator Sallie Mae in 2014. It faced claims of steering struggling student loan borrowers into costly long-term forbearances instead of counseling them about the benefits of more affordable income-driven repayment plans, dating back to 2009 before its spinout. According to the prosecutors, the interest that accrued because of Navient’s forbearance steering practices was added to the borrowers’ loan balances, pushing borrowers further in debt. Had the company instead provided borrowers with the help it promised, income-driven repayment plans could have potentially reduced payments to as low as $0 per month, provided interest subsidies, and/or helped attain forgiveness of any remaining balance after 20-25 years of qualifying payments, or in as little as 10 years in some scenarios. Navient also allegedly originated predatory subprime private loans from roughly 2002 to 2010 to students attending for-profit schools and colleges with low graduation rates, even though it knew that a very high percentage of such borrowers would be unable to repay the loans, prosecutors said. Navient allegedly made these risky subprime loans as “an inducement to get schools to use Navient as a preferred lender” for highly-profitable federal and “prime” private loans, without regard for borrowers and their families, many of whom were unknowingly ensnared in debts they could never repay. “Our investigation uncovered two deceptive and unfair schemes Navient was using that broke the law and put their own profits ahead of the people they served. The first scheme involved Navient issuing subprime private loans to borrowers they knew could not pay the money back – similar to the mortgage crisis in 2008. The second scheme we uncovered was Navient’s drive to mislead borrowers into forbearances, which stopped them from paying down the principal on their loan and led many to accumulate more debt and never-ending interest payments,” Shapiro said. The settlement ends four years of legal wrangling with Shaprio’s office in which Navient denied wrongdoing, a position it retains in the settlement. After winning several motion hearings and a July 2020 federal appeal, paving the way for the case to head to trial though, Navient chose instead to broker the massive settlement. “The company’s decision to resolve these matters, which were based on unfounded claims, allows us to avoid the additional burden, expense, time and distraction to prevail in court,” Navient Chief Legal Officer Mark Heleen said in a statement Thursday. “Navient is and has been continually focused on helping student loan borrowers understand and select the right payment options to fit their needs. In fact, we’ve driven up income-driven repayment plan enrollment and driven down default rates, and every year, hundreds of thousands of borrowers we support successfully pay off their student loans.” Investors were largely relieved to see the litigation resolved, potentially at a lower cost despite the billion-dollar write-off had the cases gone to trial. Share value for Navient rose more than 2% Thursday following the news of the settlement. The company will likely address the settlement on its fourth quarter earnings call on Jan. 25. Aside from the financial considerations, the settlement also includes conduct reforms that require Navient to explain and offer income-driven repayment plans to borrowers, train specialists who will advise distressed borrowers concerning alternative repayment options, and counsel public service workers concerning Public Service Loan Forgiveness (PSLF) and related programs. Borrowers receiving private loan debt cancellation will receive a notice from Navient by July 2022 while federal borrowers will receive future notice of how to receive $260 restitution payments. More information is available at www.NavientAGSettlement.com. How the settlement might affect Navient's looming proxy battle with Sherborne Investors Management LP, a New York-based turnaround hedge fund led by activist investor Edward Bramson, remains to be seen. Sherborne recently purchased a substantial stake in Navient, boosting its holdings to about 16% and making it the company’s largest shareholder, according to Reuters. In reaction to Sherborne’s purchase, Navient’s board adopted a shareholders rights plan, which is also known as a “poison pill” plan. It triggers if an investor acquires ownership of 20% or more of Navient common stock and allows other existing investors to purchase additional shares at a discount — therefore making further consolidation by the threatening firm more expensive. Sherborne, which had waged a lengthy fight with Barclays, has yet to public say what its intentions or demands are for Navient, which is less than two years removed from its last proxy battle.