About 13,000 student loan borrowers in Pennsylvania will receive restitution or debt cancellation after a loan servicer paid a whopping $1.85 billion to settle a nationwide lawsuit.

This is great news and likely a relief for Pennsylvania students seeking higher education, who have the second-highest amount of debt in the United States, according to a state auditor general’s report from two years ago.

Loan servicer Navient will pay $3.5 million in restitution to 13,000 Pennsylvania borrowers, while 2,467 others will receive $67 million in student debt cancellation, state Attorney General Josh Shapiro announced last week.

The lawsuit — which included 39 state attorneys general — prompting the settlement was a result of "widespread unfair, deceptive and abusive student loan servicing practices," Shapiro said.

Two "schemes" discovered during an investigation included issuing subprime private loans that Navient knew borrowers could not pay back easily, and misleading borrowers into forbearances that accumulated more debt.

A 2020 report from the state Auditor General's Office found the average debt per borrower among Pennsylvania students was about $37,000, making it the nation's second highest. The state carried $68 billion in student loan debt, the report said.

Shapiro said that, as of 2021, the average debt is now about $39,000.

Also in 2020, studies by credit report provider WalletHub and Peterson's College Data found that Pennsylvania was among the states with the highest amounts of college student debt. But it was also ranked 47th among states for per capita funding for higher education.

Officials at the county’s institutions of higher learning linked high rates of student debt with the lack of state funding for higher education.

Slippery Rock University president William Behre told the Eagle in 2020 that the state covered about 50% of State System of Higher Education school budgets in the 1990s, but that modern funding levels — between 25 to 27% of budgets — are among the lowest in the nation.

In recent years, the State System has frozen tuition rates due to COVID-19, but it had only done so a few times in the three decades prior to the pandemic.

We're glad to see Navient paying restitution to borrowers, and are pleased the loan servicer will be required to make changes such as training specialists to assist borrowers on alternative repayment options and counseling them on loan forgiveness plans.

We also agree with the Attorney General’s Office's that more "meaningful relief" needs to be provided for students seeking financial assistance while pursuing higher education.

Students should be able to focus on the education they're receiving, and spend less time worrying about the money they'll owe.

— NCD