No, the 2022 settlement only cancelled specific private subprime loans; federal loans serviced by Navient were not cancelled but transferred to other servicers.
Millions of borrowers saw headlines about a massive settlement and stopped paying their bills. That is a dangerous mistake. The agreement between Navient and 39 state attorneys general was specific. It targeted predatory private loans given to students attending for-profit schools with low graduation rates.
If you hold federal loans (FFELP or Direct), this specific cancellation does not apply to you. Federal loans moved to Aidvantage or other servicers. Understanding where you stand is the only way to protect your credit score and wallet.
The Facts Behind Are All Navient Student Loans Cancelled?
Confusion runs high because the numbers were huge. The settlement wiped out $1.7 billion in private student loan debt. However, that figure covered roughly 66,000 borrowers. Compare that to the millions of accounts Navient managed, and the gap becomes clear.
To qualify for full cancellation, a loan had to meet strict criteria. The debt had to be private. It had to be subprime. The borrower must have attended specific schools listed in the lawsuit. Most importantly, the loan had to be in a delinquent status—specifically charged-off—by June 30, 2021.
Borrowers who kept up with payments often found themselves excluded. This created frustration. People felt punished for responsible repayment. The settlement aimed to fix past predatory lending practices where Navient (formerly Sallie Mae) issued loans they knew students could arguably never repay.
Breakdown Of Settlement Eligibility Criteria
You need to check your loan details against the official requirements. If you meet these points, you should have already received a notification from the settlement administrator. If you did not receive a notice, you likely do not qualify.
The following table details the specific requirements mandated by the court agreement. This provides a clear checklist to see why some debts vanished while others remained.
| Criteria Category | Requirement For Cancellation | Disqualifying Factor |
|---|---|---|
| Loan Type | Private Education Loans only. | Federal Direct or FFELP Loans. |
| Loan Status | Must be “Charged-Off” by June 30, 2021. | Current, active, or paid-in-full loans. |
| Origination Date | Loans issued between 2002 and 2010. | Loans issued after 2014. |
| School Type | Specific for-profit schools (e.g., ITT Tech, Art Institute). | Public universities or community colleges. |
| Borrower Location | Mailing address in one of the 39 participating states/zones. | Address in a non-participating state during the snapshot. |
| Credit Tier | Subprime rating at origination. | Prime or super-prime credit rating. |
| Action Required | None (Automatic). | Application forms (None exist for this). |
| Notification | Letter from settlement administrator (Spring 2022). | No communication received. |
Why Federal Loans Were Excluded From The Deal
Navient acted as a servicer for the Department of Education for years. They managed millions of federal accounts. The settlement lawsuit focused on their private lending arm. The attorneys general argued that Navient steered federal borrowers into forbearance instead of income-driven repayment plans.
This “steering” accusation resulted in restitution payments, not cancellation. About 350,000 federal borrowers received a check for approximately $260. This was a payment for bad service, not a discharge of the debt itself. Your principal balance remained exactly the same.
Federal loans have their own rules. A private company cannot cancel federal debt without government approval. Only the Department of Education can wipe out federal loans. This happens through programs like Public Service Loan Forgiveness (PSLF), Borrower Defense to Repayment, or Total and Permanent Disability Discharge.
What Happened To Navient Federal Loans
Navient exited the federal student loan servicing contract. They no longer manage loans owned by the Department of Education. If you had a federal loan with them, it moved. Most of these accounts went to Aidvantage.
This transfer caused panic. Borrowers logged in and saw zero balances on the Navient portal. Many celebrated prematurely. A few weeks later, a “Welcome” letter arrived from Aidvantage, showing the full balance was still due. The debt simply changed hands.
You must locate your new servicer. Ignoring this transfer leads to missed payments. Missed payments lead to credit damage and loss of eligibility for future federal forgiveness programs. Log into the Federal Student Aid website to find your current servicer.
Private Loans That Did Not Qualify
Many private loan holders ask, are all Navient student loans cancelled? and are disappointed to find theirs are not. The settlement had a narrow scope. It targeted “predatory” loans. If you took out a private loan to attend a reputable state university, you likely did not qualify.
If you had a co-signer with good credit, you likely did not qualify. The lawsuit argued that Navient targeted subprime borrowers who had no means to repay. Loans with creditworthy co-signers did not fit this argument.
Refinanced loans also typically fell outside the settlement. If you refinanced your original high-interest private loan into a new product, the original “predatory” trail broke. The new loan is a valid contract that you must repay.
Restitution Payments Versus Loan Cancellation
It is vital to distinguish between the check in the mail and the zero balance. The $1.7 billion figure grabs headlines, but the restitution pot was much smaller—about $95 million.
The restitution checks went to federal borrowers who were placed in forbearance unnecessarily. Navient allegedly encouraged forbearance because it was shorter for their call center agents to process than an income-driven repayment application. This practice caused interest to capitalize, increasing the total debt.
The $260 check was the remedy. It was a token amount. It did not reduce the loan principal. Many borrowers felt shortchanged, but cashing the check did not waive any rights to pursue other federal forgiveness channels.
Checking The Official Settlement Status
You can verify your status through the official settlement website. The site lists the qualifying schools and the timeline. Beware of scams. No one will call you asking for a fee to “process” your Navient cancellation.
Scammers use the confusion around the question “Are All Navient Student Loans Cancelled?” to steal data. They promise to add you to the list for a fee. The settlement provided automatic relief. You could not apply for it. If you qualified, Navient notified the credit bureaus to delete the tradeline.
You should review your credit report. If you qualified, the Navient trade line should state “Paid in Full” or be removed entirely. If it shows as a charge-off with a balance, and you believe you qualified, you need to file a dispute with the credit bureaus immediately.
Participating States
The settlement included 39 states and the District of Columbia. If your mailing address on file was outside these zones during the relevant period, you were excluded. This geographic restriction frustrated many who held identical loans but lived across a state line.
Understanding The FFELP Complication
The Family Federal Education Loan Program (FFELP) sits in a grey area. These are federal loans, but private banks issued them. Navient owns a massive portfolio of these commercial FFELP loans.
The COVID-19 payment pause did not apply to commercially held FFELP loans. The Navient settlement did not cancel them. These borrowers have been stuck in repayment while Direct Loan borrowers enjoyed years of 0% interest.
To get relief for FFELP loans, you often must consolidate them into a Direct Consolidation Loan. This moves the debt from Navient (or their commercial partners) to the Department of Education. Once consolidated, the loan becomes eligible for federal programs like the SAVE plan or PSLF.
Alternative Forgiveness Paths Available Now
If you missed the Navient settlement, you are not out of options. Federal and state programs offer legitimate exit strategies. The path depends on your loan type and your profession.
For those who feel their school defrauded them, the Borrower Defense to Repayment rule is a strong tool. This is a federal process. If your school lied about job placement rates or transfer credits, you can apply to have your federal loans discharged.
The table below outlines the major differences between the Navient Settlement relief and ongoing federal programs.
| Program Name | Loan Type Eligible | Application Needed? |
|---|---|---|
| Navient Settlement (2022) | Private Subprime | No (Automatic). |
| Borrower Defense | Federal Direct/FFELP | Yes (Detailed application). |
| PSLF | Federal Direct | Yes (Employment certification). |
| SAVE Plan (IDR) | Federal Direct | Yes (Income certification). |
| TPD Discharge | Federal/Private | Yes (Doctor verification). |
| Closed School Discharge | Federal Direct | Sometimes Automatic. |
Tax Implications Of The Cancellation
A major concern for any debt forgiveness is the “tax bomb.” Generally, the IRS treats cancelled debt as taxable income. However, current tax laws have suspended this rule for student loans through 2025.
Federal law states that student loan discharges between 2021 and 2025 are not federally taxable. This means you will not receive a 1099-C from the IRS for the Navient settlement amount. This provides significant relief, as the tax bill on $20,000 of forgiveness could otherwise be steep.
State taxes are different. Some states still tax cancelled debt. You must check with a tax professional in your specific state. If your state did not conform to the federal American Rescue Plan’s tax provisions, you might owe state income tax on the forgiven amount.
Steps If You Are Still Paying Navient
If you still have an active balance with Navient, it is almost certainly a private loan. The settlement is closed. The deadline to qualify based on delinquency passed years ago. You cannot stop paying now to “trigger” the settlement.
Stopping payments now will only damage your credit score. It will not qualify you for retroactive relief. If you are struggling, you must contact Navient directly. Ask for rate reduction programs or interest-only periods. Private lenders have fewer options than the federal government, but they prefer some payment over default.
Refinancing is another route. If your credit score has improved since you left school, you might qualify for a lower rate with a different lender. This pays off the Navient loan and moves you to a better contract. Be careful: refinancing federal loans turns them private, stripping away federal protections forever.
Dealing With Misleading “Debt Relief” Companies
The query “Are All Navient Student Loans Cancelled?” is a magnet for scammers. Third-party companies buy ads promising to wipe your debt. They often charge upfront fees for services you can do for free.
Never pay a company to consolidate your loans. Never pay for “access” to the settlement. The settlement administrator, Rust Consulting, handled all communications for free. If someone asks for your FSA ID password, hang up. That is a scam attempt.
You can report these scams to the Consumer Financial Protection Bureau (CFPB). They track predatory behavior in the financial sector. Reporting helps shut down these operations before they hurt other borrowers.
Are All Navient Student Loans Cancelled? Final Review
We circle back to the core question: Are all Navient student loans cancelled? The answer remains a firm no. The relief was a targeted surgical strike against specific bad debts, not a blanket amnesty.
Understanding this distinction saves you money. It prevents you from defaulting on valid debt in hopes of a miracle. Check your loan type. Verify your servicer. If you hold federal loans, look into IDR plans. If you hold private loans, focus on aggressive repayment or refinancing.
The student loan environment shifts rapidly. Rules change. Servicers change. Relying on outdated headlines about the 2022 settlement leads to financial errors. Stay current with your account status and ignore the noise.