Navient yesterday announced it was transferring 5.6 million student loan accounts that it was servicing on behalf of the Department of Education to Maximus, another loan servicing company. Navient, which had decided already that it no longer wanted to continue servicing loans under the Next Generation Financial Services Environment program, or NextGen, instead will focus on other lines of business outside of student loans, including private lending and refinancing.
The Department of Education’s Office of Federal Student Aid (FSA) must approve the transfer before it can be finalized.
The move comes after two other servicers — the Pennsylvania Higher Education Assistance Agency (PHEAA) and Granite State Management and Resources — announced during the summer that they were also choosing not to renew contracts with the federal government to service and collect on student loans.
“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,” said Jack Remondi, Navient’s President and Chief Executive, 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 Chief Operating Officer of FSA said it was reviewing the proposed transfer to “ensure that the proposal meets all legal requirements and properly protects borrowers and taxpayers.”
The announcement from Navient further muddies the waters of student loan servicing and collections, at a time when the Department of Education must also focus on resuming collection of student loans following a 23-month moratorium that was put in place as a result of the COVID-19 pandemic.
Consumer advocates were quick to criticize the announcement.
“We find it troubling that Navient can appoint its own substitute without being subject to the same rigorous and public solicitation process,” said Persis Yu, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, in a statement
