The companies are working together on the transition for student loan borrowers in the coming months.
02/07/2024 12:00 P.M.
2 minute read
Navient is transitioning student loan servicing accounts to a third-party provider, MOHELA, as part of several strategic business actions, according to a news release.
“This transaction is intended to create a variable cost structure for the servicing of our student loan portfolios and provides attractive unit economics across a wide range of servicing volume scenarios,” Navient reports. “Navient and MOHELA will work toward ensuring a seamless transition in the coming months and providing customers with uninterrupted servicing of their loans.”
Forbes reports the transition will impact 2.7 million borrowers with current private student loans and Federal Family Education Loan Program loans.
Navient received approval from the U.S. Department of Education (ED) to transfer its federal student loan contracts to other servicers, including to Maximus in 2021—ending its participation in the federal student loan servicing program, ACA International previously reported.
“After a thorough review, we are announcing targeted actions intended to simplify our business, reduce our expense base, and increase our financial and operating flexibility,” said David Yowan, president and CEO of Navient in the news release. “Over the longer-term, we believe these actions will increase the value shareholders derive from our loan portfolios and the returns we can achieve on business-building investments. As we embark on this important work, we also remain focused on running and growing our business and meeting the needs of our borrowers and clients. We look forward to continuing to provide updates as we establish a new foundation for Navient’s future success.”
Meanwhile, ED outlined a comprehensive framework aimed at enhancing oversight and accountability of student loan servicers to protect the interests of students, borrowers and taxpayers, ACA previously reported.
The framework introduces strategies to encourage better support for borrowers and empowers the DOE to take decisive action against servicer errors.
The oversight strategy is focused on real-time identification of issues that could harm borrowers, according to the release. It includes direct servicer monitoring, partnerships with federal and state regulators, and leveraging borrower complaints.
Under direct servicer monitoring, the Federal Student Aid (FSA) staff actively assesses the quality of customer service provided by loan servicers. This includes listening to and scoring customer service representatives, reviewing borrower calls and chats, and conducting secret shopper campaigns.
Related Content from ACA International:
By the Numbers: Where Student Loan Borrowers Stand on Repayment
Student Loan Servicing Issues Found in CFPB Oversight Examinations
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