Although Navient denies all charges, the company agreed to take a host of steps to improve its communication with borrowers. Navient will train its customer representatives to listen for keywords that indicate eligibility for the forgiveness program, develop standardized forms to send to interested borrowers and monitor calls to screen for problems.
The company, which declined to comment, will also set aside $1.7 million to fund an independent organization to counsel student loan borrowers in public service jobs. It will pay each teacher involved in the case $15,000. The American Federation of Teachers declined to comment on the case.
The proposed settlement, filed in U.S. District Court in Manhattan late last month, is awaiting court approval.
Although Congress sets the parameters of the forgiveness program, critics of the Education Department say it could do a better job of ensuring that the companies it pays to manage student loan payments provide accurate information to borrowers.
Some teachers, nurses and members of the military have complained of servicers leading them to believe that they were making qualifying payments when they were not, processing payments incorrectly or botching paperwork. Those mistakes could lead to additional years of payments or rejected applications.
Advocacy groups suspect poor communication and mismanagement of the program is why only 3,200 of its 146,000 applicants to date have had their loans approved for forgiveness.
Eligibility for Public Service Loan Forgiveness is complicated. Not only must applicants have at least 10 years of full-time employment certified by a qualifying employer, but they also must be enrolled in specific repayment plans, primarily those that cap monthly loan payments to a percentage of their income.
Until recently, the Education Department did little to help borrowers navigate the program. A congressional spending bill in 2018 directed the agency to create a tool for borrowers to assess their eligibility. But before that, student loan servicers were the first line of defense.