With 6 million debtors, Navient seeks to cease federal service


A second-largest federal student loan provider says it’s resigning; This is a decision that will force the Department of Education to transfer the accounts of millions of borrowers as the government begins to resume collecting payments early next year.

Navient said on Tuesday that it intends to terminate its contract with the federal government and transfer its responsibilities to another federal loan provider, Maximus. Navient serves the accounts of approximately 6 million borrowers.

Navient’s CEO, Jack Remondi, said the company wanted to “provide a smooth transition to borrowers” while shifting its focus to businesses outside of the federal student loan service.

The Department of Education is “reviewing documents and other information from Navient and Maximus to ensure that the offer meets all legal requirements and properly protects debtors and taxpayers,” Richard Cordray, chief operating officer of the department’s Federal Student Aid Office, said in a statement. .

Navient’s announcement came just two months later. FedLoan, after another major federal service providerHe said he wanted out too. Withdrawals are pushing the Education Department to move more than 15 million borrowers to new service providers – a chaotic and error-prone process in the past.

Nearly all federal student loan borrowers are skipping payments thanks to the moratorium on collections that the government imposed in March 2020 in response to the coronavirus pandemic. But those bills are about to return: Biden administration said Plans to restart collection on January 31.

If his request is successful, Navient’s federal student loan business won’t be completely over. The company is the subject of an ongoing lawsuit filed by the Consumer Financial Protection Bureau in 2017, the federal agency said. a pattern of error and error This prevented borrowers from trying to repay their loans.

“This case continues to move slowly – very, very slowly – through the court process,” Mr Remondi said in a recent earnings call to analysts. “We look forward to spending the day in court.”



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