Navient Seeks to Get Out of the Student Loan Servicing Business -- to Be Replaced by Maximus
One of the biggest student loan companies in the US wants to shut down its services
Ayelet Sheffey
Wed, September 29, 2021, 6:45 AM
Navient, the largest student-loan company in the US, announced its plans to end its loan servicing. This announcement is pending government approval. Navient services 12 million borrowers and is the third company to announce plans to end its contract.
Navient, the largest student-loan company in the country, announced it is requesting government approval to end its servicing contract on Tuesday. According to a press release, the six million borrowers who currently pay their federal student loans to Navient will be transferred to Maximus, a government loan servicing company. This is the third company to announce plans to end loan servicing this year - the Pennsylvania Higher Education Assistance Agency (PHEAA) and Granite State Management and Resources - servicing a combined 10 million borrowers, are ending their contracts, as well.
"Navient is pleased to work with the Department of Education and Maximus to provide a smooth transition to borrowers and Navient employees as we continue our focus on areas outside of government student loan servicing," Jack Remondi, Navient President and CEO, said in a statement. "Maximus will be a terrific partner to ensure that borrowers and the government are well served, and we look forward to receiving FSA approval."
Richard Cordray, the director of the Federal Student Aid (FSA) office, said in a statement that FSA is reviewing documents from both companies to "ensure that the proposal meets all legal requirements and properly protects borrowers and taxpayers." It is unclear when the Education Department will approve this request.
Remondi wrote in a blog post that both Navient and Maximus have been working with the Education Department over the past months to ensure a smooth transition for the borrowers, saying he is "confident borrowers will continue to be well-served" during and post-transition.
This will likely be welcome news to lawmakers like Massachusetts Sen. Elizabeth Warren, who has held Navient in her sights for years and accused it of misleading borrowers. Insider reported in April that during a hearing on student debt, Warren told Remondi that he should be fired for "actions that ripped off borrowers," including the improper marketing of loans and failing to notify borrowers of their rights.
And Student Borrower Protection Center Executive Director Seth Frotman said in a statement that "millions of Americans with student loans will no longer be forced to rely on a company that puts padding its own profits at the expense of its customers."
Notably, Cordray said during remarks at a conference earlier this month that student-loan companies are choosing to shut down rather than face more accountability. To be sure, he did not comment on specific companies but noted that "not everybody was thrilled" with his plans to strengthen oversight of the industry.
Should Navient's request to end its contract be approved, it will likely add to the administrative burdens the Education Department will be tasked with in February. Student-loan payments have been on pause for the duration of the pandemic, and the department will have to restart those payments for the 43 million borrowers with federal student loans, along with transition 16 million borrowers to new student-loan companies.
https://news.yahoo.com/biggest-company-handles-student-loans-211203272.html
Ayelet Sheffey
Wed, September 29, 2021, 6:45 AM
Navient, the largest student-loan company in the US, announced its plans to end its loan servicing. This announcement is pending government approval. Navient services 12 million borrowers and is the third company to announce plans to end its contract.
Navient, the largest student-loan company in the country, announced it is requesting government approval to end its servicing contract on Tuesday. According to a press release, the six million borrowers who currently pay their federal student loans to Navient will be transferred to Maximus, a government loan servicing company. This is the third company to announce plans to end loan servicing this year - the Pennsylvania Higher Education Assistance Agency (PHEAA) and Granite State Management and Resources - servicing a combined 10 million borrowers, are ending their contracts, as well.
"Navient is pleased to work with the Department of Education and Maximus to provide a smooth transition to borrowers and Navient employees as we continue our focus on areas outside of government student loan servicing," Jack Remondi, Navient President and CEO, said in a statement. "Maximus will be a terrific partner to ensure that borrowers and the government are well served, and we look forward to receiving FSA approval."
Richard Cordray, the director of the Federal Student Aid (FSA) office, said in a statement that FSA is reviewing documents from both companies to "ensure that the proposal meets all legal requirements and properly protects borrowers and taxpayers." It is unclear when the Education Department will approve this request.
Remondi wrote in a blog post that both Navient and Maximus have been working with the Education Department over the past months to ensure a smooth transition for the borrowers, saying he is "confident borrowers will continue to be well-served" during and post-transition.
This will likely be welcome news to lawmakers like Massachusetts Sen. Elizabeth Warren, who has held Navient in her sights for years and accused it of misleading borrowers. Insider reported in April that during a hearing on student debt, Warren told Remondi that he should be fired for "actions that ripped off borrowers," including the improper marketing of loans and failing to notify borrowers of their rights.
And Student Borrower Protection Center Executive Director Seth Frotman said in a statement that "millions of Americans with student loans will no longer be forced to rely on a company that puts padding its own profits at the expense of its customers."
Notably, Cordray said during remarks at a conference earlier this month that student-loan companies are choosing to shut down rather than face more accountability. To be sure, he did not comment on specific companies but noted that "not everybody was thrilled" with his plans to strengthen oversight of the industry.
Should Navient's request to end its contract be approved, it will likely add to the administrative burdens the Education Department will be tasked with in February. Student-loan payments have been on pause for the duration of the pandemic, and the department will have to restart those payments for the 43 million borrowers with federal student loans, along with transition 16 million borrowers to new student-loan companies.
https://news.yahoo.com/biggest-company-handles-student-loans-211203272.html