If approved, about 6 million borrowers will send their monthly payments to a new service agent. Navient plans to transfer those loans to Maximus, a company that has already contracted with the Department of Education to pay off overdue student loans.
The agency is reviewing documents from Navient and Maximus to “ensure the proposal meets all legal requirements and properly protects borrowers and taxpayers,” said Richard Cordray, director of federal student aid operations, in a press release.
Navient was prosecuted in 2017 for allegedly processing payments incorrectly by the Consumer Financial Protection Bureau when Cordray was the head of that federal agency. Navient has denied the allegations and the trial is ongoing. He has also been the subject of legal proceedings
by several state attorneys general.
The company has been repeatedly targeted by consumer advocates and progressives, including Senator Elizabeth Warren, a Massachusetts advocate who earlier this year called on the government to turn Navient.
“Navient’s conduct has left millions of borrowers confused and paid longer, and prevented them from getting the help they are entitled to,” said Persis Yu, director of the loan borrower assistance project. students at the National Consumer Law Center, in a statement. the week.
What happens next?
Navient is currently one of the four largest service providers used by the Department of Education, processing over $ 237 billion in student loans. It was derived from another student loan company, Sallie Mae, in 2014.
Around 10 million additional borrowers will also benefit from a new servicer in the coming months. The Pennsylvania Higher Education Assistance Agency (PHEAA), better known as FedLoan, said in July that it would also end its contract with the Department of Education, citing the increased complexity and cost of servicing loans. federal students. Granite State, a nonprofit that serves around 1 million federal borrowers, is also pulling out of the business and transferring its loans to Edfinancial.
Borrowers should be on the lookout for advice from these agents regarding the transfer. It is not known where all of the PHEAA loans will be transferred to, but some are currently turned over to an agent called MOHELA, according to the Education Ministry.
Payments on federal student loans suspended since March 2020 are expected to resume on February 1. They have been frozen to help borrowers during the pandemic and have been repeatedly extended by the Trump and Biden administrations.