On Thursday, Navient, one of the nation's largest student loan companies,
agreed to a major settlement with 39 state attorneys general.
Navient was accused of misleading student loan borrowers into forbearances
and away from critical federal student loan relief programmes like income-driven repayment
plans and Public Service Loan Forgiveness, the lawsuit claimed (PSLF).
Interest accrues on student loans during paused payments, which can be capitalised — added back to
the loan principal balance — leading to compounding and runaway balance growth.
Forbearances do not count towards loan forgiveness terms, such as the 25-year Income Based
Repayment (IBR) repayment term or the 10-year public service employment requirement for PSLF borrowers.