Large student loan company to stop managing federal student loans
One of the largest student loan companies in the United States, Navient, has announced that it plans to end its federal student loan service, becoming the third company to make such a move.
The company has sought government approval to terminate its service contract, Erudera.com reports.
According to a press release from Navient, the company will transfer the federal student loan accounts of the six million borrowers to Maximus, which is another sub-contractor for the Department of Education.
“Navient and Maximus have submitted a preliminary request for review. Contract novation will be subject to FSA approval. After receipt of all necessary approvals, including FSA approval and other customary closing conditions , Navient would be leaving the Department of Education’s student loan management program as planned ”, the press release added.
Massachusetts Senator Elizabeth Warren welcomed the news, saying Navient had spent years misleading, cheating and abusing student borrowers.
“The federal student loans program will be much better without them” she wrote on Twitter.
Meanwhile, Navient President and CEO Jack Remondi said he was delighted his company is working with the Department of Education and Maximus to ensure a smooth transition for Navient borrowers and employees as the company focuses on areas other than government student loan servicing.
“Maximus will be a great partner in ensuring borrowers and government are well served, and we look forward to receiving FSA approval,” said Remondi.
He added that Navient and Maximus had worked with the Education Ministry earlier to ease the transition for borrowers.
According to Navient’s press release, the two companies are committed to working together in this regard, optimistic that the government will find the plan constructive for a reliable approach to supporting borrowers and advancing its vision for next-generation services. .
In a statement, Federal Student Aid Office (FSA) director Richard Cordray said the FSA is reviewing documents submitted by the two companies to ensure the plan meets legal requirements and will not affect not negatively on borrowers.
Navient manages nearly $ 300 billion in private and federal student loans for a total of 12 million student loan borrowers, and it’s not the only company to announce plans to end loan service this year. The Pennsylvania Higher Education Assistance Agency (PHEAA) and Granite State Management and Resources, which serve around 10 million borrowers, have also decided to end their contracts.