Navient exits the student loan market: here’s what you need to know
The biggest name in student loans leaves the company. Navient, which currently manages – or, in industry parlance, services – student loans for 5.6 million US clients, asked the US Department of Education to allow it to shift its workload to Maximus, a global administrator of government programs. While Navient himself is not a lender, he manages the student loan repayment process on behalf of the government – or, he did, until former President Donald Trump declared a moratorium. on student debt payments in March 2020 in response to COVID-19. This measure has since been extended by President Biden, and student debt obligations remain on hold..
Navient’s planned departure follows the exit of two other federal loan managers earlier this year. “Between FedLoan, Granite State and now Navient, the impact and timing of these large-scale service transitions amid the expected return to repayment will bring unprecedented change for nearly 16 million total borrowers,” said Lindsay Clark, Director of External Affairs at Savi. , a social impact technology company that helps borrowers navigate federal loans.
Betweenand talk about , there’s plenty to follow in this once-dormant financial services industry swamp. If you are one of the millions of borrowers with a loan managed by Navient, everything you need to know can be found below.
Why is Navient withdrawing from the student loan business?
Navient is leaving the company under fire from the Consumer Financial Protection Bureau, which sued him in 2017, saying the company made it difficult for borrowers to repay their loans. This lawsuit is still ongoing, and Lux says that “increased federal regulation and government control over the federal loan department is almost certainly to blame for Navient’s departure.”
But Navient was already set to end its federal loan services at the end of the year. In 2020, the US Department of Education announced changes to the loan department to modernize the federal student loan system. As part of the Next Gen initiative, the Education Department expanded its partnership with five of the 10 current loan managers, who would continue to manage federal student loans, but under tighter government regulations. Navient, along with FedLoan and Granite State have elected to end their participation in the Federal Student Loans Service at the end of 2021.
What does the departure of Navient mean for borrowers?
If your loans are currently managed by Navient, here’s what you need to know:
1. Navient will stop managing your student loans
Whether or not the FSA agrees to transfer the loans to Maximus, your student loan will no longer be managed by Navient. While the current transition was supposed to take place at the end of the year, if the FSA lets Navient agree to step down early, that means the transition could take place sooner.
2. Maxime could become your new loan manager
If Navient’s deal with Maximus is accepted by the FSA, Maximus could become your new loan manager. This means that you would pay your student loans to Maximus instead of Navient. The FSA may also choose to transfer your loan to one of the other four Next Gen Approved Services.
3. You will be informed of the next steps
Regardless of how it goes, you will receive a notification from the Ministry of Education, Navient and your new repairer regarding the next steps. If you are a current Navient customer, we recommend that you log into your account and ensure that your mailing address and other contact information is up to date. You can also pull records of your payment history, current loan balances, and annual statements now, so you have them for your records.
4. You shouldn’t notice any major changes
While the transition may happen sooner than you expect, in the end, you shouldn’t notice any major changes in your student loans. Any special plans or payment methods you signed up for should automatically transfer. That being said, you’ll want to be on the lookout for key dates, like when you can start logging into your new loan management system, to verify that everything has transferred correctly.
5. Consider reviewing repayment plans now.
If you took advantage of the federal moratorium on student loan repayments –– now is the perfect time to review your repayment plan. If your financial situation has changed, you may be eligible for an income-tested repayment plan or other repayment option. And you don’t have to wait to register; all you need to do is log in and confirm that your personal information is correct.
6. You may experience delays during the transition
The transition can slow things down. Customer support response times may be delayed as account information is transferred, particularly if your account is on hold. “It will be interesting to see how the new services handle the transition and formation of new borrower assistance calls,” said Fred Amrein, CEO and Founder of PayForEDAmrein. “Borrowers should expect a longer response time.” Right now, the best way to ensure a smooth transition is to make sure your refund information is up to date.