Pennsylvania borrowers to receive $67 million in debt cancellation through Navient settlement 

Pennsylvania borrowers impacted by allegedly deceptive practices by student loan servicer Navient, will receive $3.5 million in restitution payments and $67 million in debt cancellation. 

Pennsylvania Attorney General Josh Shapiro announced on Thursday that Navient has agreed to provide relief totaling $1.85 billion to borrowers across the country as part of a settlement with a coalition of 39 state attorneys general. 

The settlement follows claims that the student loan company used forbearance steering practices and “predatory” subprime private loans to maximize profits. 

“Navient repeatedly and deliberately put profits ahead of its borrowers – it engaged in deceptive and abusive practices, targeted students who it knew would struggle to pay loans back and placed an unfair burden on people trying to improve their lives through education,” said Shapiro. “Today’s settlement corrects Navient’s past behavior, provides much needed relief to Pennsylvania borrowers, and puts in place safeguards to ensure this company never preys on student loan borrowers again.” 

Shapiro sued Navient in October 2017 and co-led the litigation and negotiation of the settlement with Washington, Illinois, Massachusetts and California. 

The attorneys general claim that Navient steered borrowers into putting a forbearance on their loans, which added to the borrowers’ loan balances, pushing them further into debt. Navient could have instead offered services such as income-driven repayment plans or helped borrowers attain forgiveness of remaining balances of 20-25 years of qualifying payments. 

Navient also allegedly originated subprime private loans to students attending for-profit schools and colleges with low graduation rates, even though it knew that a vey high percentage of those borrowers wouldn’t be able to pay back their loans. 

Under the terms of the settlement, Navient will cancel the remaining balance on nearly $1.7 billion in subprime private student loan balances owed by nearly 66,000 borrowers nationwide. In addition, a total of $95 million in restitution payments of about $260 each will be distributed to approximately 350,000 federal loan borrowers who were placed in certain types of long-term forbearances. 

Approximately 13,000 Pennsylvania borrowers will receive $3.5 million in restitution payments and another 2,467 Pennsylvanians will receive $67 million in debt cancellation. 

“This is something myself, as well as many people in my position, felt like we would never get ahead of,” said Nicole S. of Easton. Nicole, a former student of the Art Institute of NYC, was a victim of the alleged practices.  

“So many of my loans, which are private, individual loans, they don’t offer consolidation or income driven payments—they would rather put you right into forbearance, so it sits there growing interest,” she said. “I’ve been trying to get a mortgage for five years. My interest rate is higher. Anything you need credit for is affected.” 

Barley Snyder reelects managing partner  

Jeffrey Lobach. PHOTO/PROVIDED

Barley Snyder managing partner Jeff Lobach has agreed to continue his leadership role into its fifth term, making him the longest-serving managing partner in the firm’s history. 

The midstate law firm of more than 100 attorneys elected Lobach to continue as managing partner in 2022 and 2023. 

Barley Snyder’s managing partner acts as the firm’s CEO, overseeing operations as well as long-term planning, the firm wrote in a statement on Thursday. 

In his eight years of leadership, Lobach has helped the firm double in size from 55 attorneys. The firm has also opened five new offices, moved its Malvern office to a larger location and conducted renovations of its York and Hanover offices. 

“I’d be less than truthful if I said this has been an easy two years, because it hasn’t. It hasn’t been easy for anyone,” he said. “But the grit, the tenacity and the strength I saw from our firm’s attorneys and staff since March 2020 has inspired me to continue as the firm’s managing partner. I am honored that the firm’s partnership believes in me enough to trust me with this task.” 

Lobach is a member of the firm’s business, finance & creditors’ rights, real estate and education practice groups, as well as the construction, health care, banking and hospitality industry groups. 

Barley Snyder has offices in Lancaster, York, Reading, Harrisburg, Malvern, Hanover, Gettysburg and Schuylkill Haven, Pennsylvania and Hunt Valley and Columbia, Maryland. 

Veteran criminal defense attorney joins Saxton & Stump

William Costopoulos. PHOTO/PROVIDED

Noted criminal defense attorney William Costopoulos will be leaving his Lemoyne-based law firm to join Saxton & Stump’s White Collar Defense practice.

Costopoulos spent a majority of his career in private practice, handling a number of well-known cases including the 2002 acquittal of former City of York Mayor Charles Robinson and the defense of Dr. Jay Smith, who was convicted of murder in 1986 and exonerated six years later.

Harrisburg-based Saxton & Stump announced Wednesday that Costopoulos will support the firm’s appellate and post-trial advocacy and attorney and judicial ethics and discipline teams. He will be working alongside former Pennsylvania Deputy Attorney General Carson Morris and former judges Lawrence Stengel and Robert Graci.

“Bill is considered one of the top criminal defense lawyers on the East Coast and we are thrilled that he is joining us,” said James Saxton, CEO of Saxton & Stump. “We recognize a growing need in our region so adding the expertise Bill has developed over a brilliant career is an excellent fit for our already established team.”

Costopoulos is a founding member of Costopoulos, Foster & Fields in Lemoyne where he practiced criminal law, criminal appeals and personal injury litigation.

During his career he represented former Senate Whip Jane Orie and former Speaker of the House H. William DeWeese on public corruption charges and state Supreme Court Justice J. Michael Eakin before the Judicial Conduct Board.

“Joining Saxton & Stump’s team of skilled defense attorneys is an excellent opportunity for me,” said Costopoulos. “As I am winding down my current firm, I’m excited to add to their impressive team. The combination of a former federal judge, a former state judge, former prosecutors and renowned defense attorneys is the perfect recipe for arguably the strongest team to fight clients’ legal battles.”

Business leaders stress need for COVID liability protection

Gov. Tom Wolf will need to expand liability protections to manufacturers, small businesses and more health care providers or risk Pennsylvania businesses refusing to open for fear of frivolous COVID-19 related lawsuits, said a coalition of state associations.

In early May, Wolf signed an executive order that provided legal protections to health care providers against medical malpractice suits related to treatment of COVID-19.

A group of leaders from numerous state associations, including the Pennsylvania Medical Society, Pennsylvania Chamber of Business and Industry and the PA Manufacturers Association, asked the governor to offer similar protection to more industries during a media call last week.

Expanding liability protection to more businesses would protect companies like manufacturers, many of which transformed their productions to help supply goods such as personal protective equipment to hospitals, said David Taylor, president of the PA Manufacturers Association.

By failing to give protections to manufacturers, the state would be ignoring the risk businesses took to support their communities, he said.

“Manufacturers accepted that challenge and brought on that risk,” he said. “It is disappointing that the governor would fail to recognize the contributions made by manufacturers.”

Liability protection could also let small businesses feel comfortable reopening their storefronts without fear that they could be sued if someone contracts the virus while in their store.

“There is a critical question there: do I re-risk everything I’ve built, or do I make the decision to remain closed or stay closed,” said Gordon Denlinger, Pennsylvania state director of the National Federation of Independent Businesses. “Our concern is that we don’t get the reopening we need because of the threat of these lawsuits.”

Proponents of increasing the protections for health care providers say that Wolf’s orders don’t protect as many providers as similar laws in New York and New Jersey, both of which were enacted in April.

While the governor’s executive order protects health care workers providing care to COVID-19 patients in hospitals and nursing homes, it does not protect physicians providing care in their offices from malpractice lawsuits, according to Dr. Lawrence John, president of the Pennsylvania Medical Society.

“As our state reopens, physicians in all of these settings will play a role in ensuring that Pennsylvanians have access to care if they come down with symptoms,” John said. “Since attorneys can’t sue health care workers providing care in hospitals, physicians will be an easy target for these claims.”

The order also excludes long-term care facilities, where 3,557 of the state’s 5,567 total deaths occurred, according to a report by the Pennsylvania Department of Health on June 1.

Gene Barr, president of the Pennsylvania Chamber of Business and Industry, said that the coalition is not condoning blanketed immunity for all health care providers and businesses, but rather targeted temporary immunity with strict guidelines.

“If they disregard the guidelines, they lose the protection,” he said. “We have businesses fighting for survival and we need to get them back as soon as we can. The fear of lawsuits will hinder that.”

Has the demand in liquor licenses peaked?

Demand for beer and wine licenses in Lancaster and York may be slowing. If so, license prices may drop.

The cost of a restaurant liquor license in York and Lancaster counties may fall from the heights they reached in recent years, partially because fewer grocers stores are looking to buy them.

Last month, Larry Heim, an attorney with Lancaster-based law firm Barley Snyder, offered a series of restaurant liquor licenses available for purchase to clients, and they declined. For years his corporate clients in the super market industry have quickly purchased available liquor licenses so they could sell wine and beer from their stores. December marked the first time since the state allowed grocers to purchase a liquor license that Heim didn’t see interest from his clients in either York or Lancaster.

“I had some licenses available and ran it by the usual suspects to see if they were interested and they weren’t,” he said. “It’s the lack of interest that surprised me and I know a couple of those players stated through their council that for York County they had filled all of the spaces where they wanted licenses.”

In June of 2016, Gov. Tom Wolf signed Act 39 of 2016 into law, which allowed the sale of beer and wine by grocery and convenience stores. For the last three years, convenience stores and grocers have been some of the state’s biggest buyers of restaurant liquor licenses, either through public auction or private sale.

Fall of 2016 was the first time that the Pennsylvania Liquor Control Board opened public bidding for the available restaurant liquor licenses in the state. During the bidding process, 41 businesses put their names into consideration, with bid amounts going as high as $526,000 by Giant Food Stores LLC for one of its stores in Montgomery County.

“If you take a look at the winning bidders, a number of them were grocery store chains and convenience store chains,” said Shawn Kelly, spokesman for the state Liquor Control Board. “We are still seeing bids in the hundreds of thousands of dollars range.”

Because of the high rates that the liquor licenses have been going for as companies look for liquor licenses for each of their stores, smaller restaurants, particularly in more populated counties, haven’t had the resources to compete.

If fewer large entities are buying licenses, as Heim’s experience last month suggests, the costs could decline.

“The appetite will eventually be satiated and we may be at that point,” Heim said.

Competing on a $500,000 bid is a high ask for local restaurateurs, but the lower the cost for one of Pennsylvania’s restaurant liquor licenses, the more likely it could be that more bank’s become interested in financing for a restaurant’s liquor license.

Restaurant lending is itself a niche business and financing liquor licenses is uncommon, said Eric Williams, senior vice president and chief lending officer of Ephrata Bank.

“You have to understand all of the legalities and considerations if you will take a security interest in a liquor license,” he said. “With restaurant lending, generally it’s not something we are comfortable with. There is a lot of volatility there.”

Heim recommends his clients wait to see what the market does before selling their licenses at a reduced price, noting that December could just have been a slow month. He also noted that he is still seeing high sales figures in Dauphin County, showing that there is still plenty of demand for the licenses elsewhere.