Tens of thousands of student loan borrowers may be eligible for student loan forgiveness. However, it won't be at the hands of the government as many have longed for. Instead, it will be because of a substantial settlement brought on due to a lawsuit against one of the nation’s biggest student loan providers.

The student loan servicer Navient has reached a massive $1.85 billion settlement. The lawsuit was brought forward by several state Attorneys General who accused the loan servicing giant of unfair predatory practices.

Among its predatory practices, the plaintiffs in the suit explained that Navient encouraged borrowers to pause their loan payments through forbearance. In doing this, Navient did not redirect students to lower-cost repayment plans that were tied directly to the borrowers’ income period.

Pennsylvania Attorney General Josh Shapiro, who was a plaintiff in the suit, shared with CNBC that the company intentionally exploited borrowers.

"Navient had a program where you could actually repay your student loan based on your earnings, right? And instead of steering these student loan holders towards that, they instead put them in a risky scheme where they jacked up the interest rates and ultimately that scheme cost student loan holders four billion dollars." Shapiro insists, "That is four billion dollars that they should have never had to pay in the first place."

As part of the settlement, Navient detailed that roughly 66,000 borrowers “who took out certain private student loans, largely between 2002 and 2010, and who subsequently defaulted and met other criteria,” will have their debts canceled.

Although the company has agreed to enter into a settlement, the company's chief legal officer Mark Heleen shared a statement defending that the company did not break the law. Instead, Heleen explains they decided to move forward with the settlement because they wanted to “avoid the additional burden, expense, time, and distraction to prevail in court.”

Who Will Qualify for Debt Relief and Financial Compensation?

The debt relief as detailed in the settlement will primarily go to borrowers who held a subprime student loan through Navient or Sallie Mae between 2002 and 2014. Qualifying borrowers also must have more than seven consecutive months of delinquent payments before June 30th, 2021.

Some borrowers who held non-subprime loans may also qualify for the debt cancellation if they attended certain for-profit schools found here.

According to the settlement, some states will have a “separate Consumer Fund.” Through this consumer fund, states will distribute payments directly to borrowers who qualify for financial compensation. Roughly 35,000 borrowers will receive a $260 payment from this fund.

Borrowers who qualify for debt relief or payment will not need to take any action. Rather, they must make sure that the information on their student aid account is up to date with current contact information, as Naviant will alert borrowers.