Navient becomes the last student loan manager to leave the federal student loan administration system
“Navient and Maximus announced today that the companies have signed a definitive agreement to transfer loan service for student loan accounts owned by the US Department of Education from Navient to Maximus through contract novation. , subject to ministry approval, “the company said in a statement. declaration. “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. â
âNavient is excited to work with the Department of Education and Maximus to ensure a smooth transition for borrowers and Navient employees as we continue to focus on areas other than government student loan servicing,â said Jack Remondi, President and CEO of Navient, said in a press release. “Maximus will be a great partner in ensuring borrowers and government are well served, and we look forward to receiving FSA approval.”
The Education Ministry noted that Navient’s proposal requires FSA approval. “The FSA is reviewing documents and other information from Navient and Maximus to ensure that the proposal meets all legal requirements and properly protects borrowers and taxpayers,” the education ministry said in a statement.
Navient is just the latest major student loan manager to announce its exit from the Department of Education’s student loan system. In July, two other major student loan managers – Granite State Management and Resources and FedLoan Servicing (which manages the civil service loan forgiveness program) – also announced their abrupt departure.
The latest service reshuffle may cause headaches for the Biden administration. Prior to Navient’s announcement, the ministry was already trying to determine where it would transfer the 10 million student loan borrower accounts managed by FedLoan Servicing and Granite State. The department will now face millions of additional account transfers – as tens of millions of borrowers move closer to resuming repayments on their federal student loans, which have been on hold since March of last year. The Biden administration has indicated that its final extension of the student loan payment hiatus until the end of January 2022 will be the final extension of the relief.
Key Biden officials have expressed concern over the return to the refund. “We can expect that many, many borrowers will not be impatient to return to repayment when they have been led to believe, or even hope, that it would never happen” because of the promises of mass cancellation student loans, said Richard Cordray, chief operating officer of Federal Student Aid at the US Department of Education, in remarks earlier this month. âOvercoming this psychological hurdle with millions of Americans can be a lot harder job than we know. “
Unlike the departures of FedLoan Servicing and Granite State, however, Navient’s federal student loan accounts – if approved by the ministry – would be transferred to Maximus, a company that currently manages a large portion of the loan portfolio. Federal students in default of the Department of Education. The ministry has yet to indicate where the FedLoan Servicing and Granite State accounts will end.
Still, advocates for student loan borrowers have expressed concern about the disruption the service changes could cause. âThere is no way to transfer these accounts harmlessly,â the Debt Collective – a debtors union and advocacy organization for student loan borrowers – said in a tweet.
Indeed, transfers from the student loan service have always been disruptive. In a report released in 2015 following the latest major overhaul of the ministry’s services, the Consumer Financial Protection Bureau found that “service transfers can create confusion when companies have different policies and procedures. Regarding the Display, Allocation and Processing of Payments … As services change, borrowers may need to navigate a range of new policies and procedures. Additionally, when errors occur in handling transfers, commentators note that it can affect all aspects of the student loan repayment process, leading to problems. “
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