“We are told over and over again throughout our lives that higher education is what we need to do. It is the gateway out of poverty,” said Keri Smith, an attorney at Community Legal Services.
The Philadelphia-based nonprofit provides free help to low-income people struggling with student loans.
“This is a systemic problem that we see many individuals in Philadelphia falling victim to,” Smith said.
That’s why the settlement announced Thursday with the Wilmington-based lender Navient is so huge.
Sixty-six thousand Americans will cancel $1.7 billion in private student loans. This includes more than 2,400 people in Pennsylvania.
RELATED: Their Student Loans Have Been Canceled, Who Qualify for Payments in Navient Settlement
Prosecutors from across the country, including Pennsylvania Attorney General Josh Shapiro, say Navient was involved in predatory lending.
“These were loans that were designed to fail. They didn’t care because they weren’t there for the borrower, but instead to get a bigger piece of the pie for federal student loans,” Smith said. “They were left with very high cost loans that they had no ability to pay.”
It affects everyone, but some groups are affected more than others, says Philadelphia City Council member Kendra Brooks.
“We know who it affected: working-class sons, blacks, and women,” Brooks said.
Includes her family. Brooks took out student loans for herself and two of her daughters.
“I think I’m down to $65,000 left for student loans,” she said of the amount she had left to pay for her education. “This has followed me for 14 years.”
Smith says the average age of a person seeking her institution’s help for student loans is 55. Oftentimes, they are people who are burdened with debts from their college education or the education of their children or grandchildren.
The settlement also includes $95 million in compensation payments to people who took out federal student loans. About 13,000 people in Pennsylvania will receive checks of $260 each.
Navient never tells them they qualify for income-based programs that would have made payments as low as $0 per month. Instead, the company has registered people impatient.
“Patience is when they don’t make any payments, but what happens is that interest keeps accumulating on that debt. That student loan debt is growing and growing,” Smith said.
She adds that the impact extends far beyond individual loans.
“This is really a civil rights issue,” Smith said. “Student loan debt is adding to an already wide racial wealth gap.”
That’s why advocates like Brooks want the next step to be federal student loan forgiveness.
“This problem will continue until we see some real relief,” Brooks said.
Anyone whose debt is canceled will receive a notification in July.
Federal borrowers eligible for redemption will receive notices of those in the spring.
Smith reiterates that even for those who do not receive loan cancellation, there is still help.
There is a federal pause to pay off student loans through May.
Smith suggests using this time to contact lenders and request adjustments to payment plans.
She also advises people to seek help from nonprofit organizations that specialize in guiding people through the process of paying off student loans.
Find more information about student loans from Community Legal Services, click here.
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