The company would be the third student loan servicer to leave the program.
9/29/2021 10:00
Navient announced Tuesday that it has agreed to transfer its servicing contract to student loan company Maximus, ending its participation in the federal student loan servicing program. The move is subject to approval by the U.S Department of Education (DOE).
“Since we declined the Department’s Next Gen servicing contract in 2020, we have explored options to ensure an easy path for borrowers and to provide ongoing work for our dedicated team members,” Jack Remondi, Navient president and CEO, said in a statement. “This solution provides a smooth transition and is a win-win-win, for borrowers, our team members, and the Department of Education.”
Maximus already works with the DOE managing servicing for borrowers in default.
“The deal, if green-lighted by Education Department officials, would represent one of the most dramatic shakeups of how the federal government collects student loans in recent years,” according to Politico.
Navient manages the federal student loan accounts of nearly 6 million borrowers who collectively owe approximately $283 billion, according to Politico.
Earlier this year, student loan servicers Granite State Management and the Pennsylvania Higher Education Assistance Agency also announced they would not continue their federal student loan servicing contracts with the DOE, ACA previously reported.
“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,” Remondi said in a press release. “Maximus will be a terrific partner to ensure that borrowers and the government are well served, and we look forward to receiving FSA approval.”
Under the proposed transaction, many Navient employees on the DOE loan servicing team will transfer to Maximus.
The contract novation is expected to be finalized in the quarter beginning Oct. 1, 2021, according to Navient.
“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,” Richard Cordray, head of Federal Student Aid, said in a statement.
Federal student loan payments are currently on hold though January 2022 because of the COVID-19 pandemic.