The Great Loan Debate


Kasuni Wickramasinghe, Editor-in-chief

To many, student loans are the “Big Bad” of the college experience. Costs of college are nearly astronomical. According to, college has a hefty price tag of $35,720 per student per year, a cost that has tripled over the past 20 years. reports that nearly 30% of undergraduate students take out loans, and now, a net total of $1.58 trillion is owed, as of November 2021. 

To take out loans, many students go through organizations known as loan servicers. These companies handle the billing and servicing of student loans. Common servicers include American Education Services, CornerStone, and the most notorious in the news today, Navient.

A lawsuit was filed against Navient in January 2017 by the Consumer Financial Protection Bureau (CFPB). Two primary claims were made. Firstly, the CFPB stated that Navient pushed students into unnecessarily long forbearance periods. Forbearance is a period of time in which monthly loan payments are either suspended or reduced, meant to relieve the financial burden of loan payments during times of crisis or financial hardship. The danger of forbearance is that even though payments are postponed, interest collects during the forbearance period. That interest is then compounded onto the principal loan balance, skyrocketing the amount owed. The lawsuit claimed that Navient forced students into forbearance through deceptive practices, like intentional miscommunication with students and cutting off customer service phone calls early. 

The CFPB also alleged that Navient issued students “non subprime” private high-interest loans for those attending certain for-profit colleges. For-profit colleges are owned by a private company, and are meant to generate revenue for non-educational purposes. These colleges don’t usually qualify for state or federal aid. The lawsuit suggested that Navient intentionally issued loans with high interest rates because they were aware that it would be exceedingly difficult for students to repay these high-interest loans because of their low graduation rates and career prospects at these colleges. 

Navient firmly denied all claims against them, and the case has been running in court for the past five years. On Jan. 13, 2022, a settlement was finally reached. It declared that Navient would have to pay $1.7 billion in private student loan cancellations for students who attended certain for-profit colleges. The company will also have to pay $95 million to approximately 350,000 federal borrowers who were pushed into long-term forbearances (averages to $260 per borrower). As per the terms of the settlement, Navient did not admit to any wrongdoing, but the settlement declared that Navient would be required to improve their company practices. Overall, the settlement is a huge victory, and marks an active effort to protect the financial rights of student borrowers. 

However, student borrowers should still be wary. Loans can be a dangerous trap. According to research conducted by a previous Hilltopper study, 39% of seniors planning on attending a four-year university plan on taking out student loans, but the amount they plan to take out is unknown. For teaching staff, two-thirds stated that they had to take out loans to afford their education. Loan amounts varied from $10,000 to even around $100,000, and one-third of teachers are still paying off their education, years after graduation (statistics credit to Priyanka Patel). 

Students and families should enter loan agreements with no small amount of caution. Do your research. Plan your finances out into the future. Carefully consider tuition costs of a school before committing to what could be a lifetime of debt. Apply to scholarships, not only before you enter college, but also while enrolled. Look into loan forgiveness programs (to read more on President Biden’s loan forgiveness programs, check out Priyanka’s article here). Though student loans can be highly beneficial in affording a higher education, we urge you to tread carefully over these debt-infested waters.