Navient, with 6 million borrowers, is asking to stop servicing federal student loans.
A second major federal student loan servicer is dropping it, a decision that would force the Education Department to move the accounts of millions of borrowers, just as the government starts collecting payments early next year.
Navient said Tuesday it wants to terminate its contract with the federal government and hand over responsibility to Maximus, another federal debt servicer. Navient serves the accounts of approximately 6 million borrowers.
Navient Chief Executive Officer Jack Raymondi said the company wants to “provide a smooth transition to borrowers” as it shifts its focus to businesses other than servicing federal student loans.
Richard Cordrey, chief operating officer of the department’s Federal Student Aid Office, said in the statement, the Department of Education “is required to provide documents and documents to ensure that the proposal meets all legal requirements and protects borrowers and taxpayers.” Reviewing other information.”
Navient’s announcement came only two months after Fedalone, another large federal serviceman, said it was also wanted. The departure would leave the Education Department to move more than 15 million borrowers to new hires – a process that has been chaotic and error-prone in the past.
Almost all federal student loan borrowers are skipping their payments, thanks to the moratorium on collections that the government imposed in March 2020 in response to the coronavirus pandemic. But those bills are going to come back: The Biden administration has said it intends to restart collections on Jan.
If his request is successful, Navient will not be completely done with the federal student loan business. The company is the subject of an ongoing lawsuit brought in 2017 by the Consumer Financial Protection Bureau, which the federal agency said was a pattern of wrongdoing and mistakes that kept borrowers trying to repay their loans.
“This case is grinding its way through a slow — very, very slow — court process right now,” Mr Raymondi told analysts on a recent earnings call. “We look forward to spending our day in court.”
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