Navient principal student loan serviceNavi) Abandon the Federal Services business, the company announce On Tuesday, it handed over 5.5 million borrowers holding about $280 billion in federal student loans to Maximus, another service employee.
Progressive advocates and lawmakers led by Senator Elizabeth Warren (D-MA) announced the move, in light of Navent’s troubled relationship with the federal government’s consumer protection agencies.
But the departure adds another challenge as the Department of Education (ED) looks to end its student loan repayment halt in January — especially after four other employees resigned last year.
“Even under the best of circumstances, this is a huge task,” Persis Yu, director of the Student Borrower Assistance Project at the National Center for Consumer Law, told Yahoo Finance. “It is a process that needs to be managed very slowly and deliberately, [and] I have a lot of concerns about whether or not that can be done in the timelines we have.”
“This whole process needs to be hand held.”
With Navient’s announcement, approximately 16.3 million student loan borrowers will receive new loan service in 2022.
Pennsylvania Agency for Higher Education Assistance – which provides its services 8.5 million Student loan borrowers — and Granite State — that provide services around 1.3 million borrowers – They both called it resigned in july. Utah Higher Education Assistance Authority, which withdrew in October 2020, Serving about one million student loan borrowers.
The departures come because the majority of 43 million student loan borrowers across the United States must start paying their loans again. Payments have been paused, without interest, since March 13, 2020, with the Biden administration The suspension period has recently been extended to January 31, 2022.
Advocates have expressed deep concern about the transfer process, given the short timeline between October and February 2022. The US government, which owns trillions of dollars in student loan debt, has expressed that ending the payment moratorium should be Carefully managed.
Regardless of Navient’s departure, these transitions will be challenging, particularly given the uncertainty over whether servants “have the ability of staff to handle the influx of borrowers who are going to get confused and will need to catch this whole process,” Yu said.
Richard Cordray, chief operating officer of Federal Student Aid, which handles its trillion-dollar student loan portfolio, said in a statement that his agency is still reviewing documents and information from both Navient and Maximus “to ensure the proposal meets all legal requirements and properly protects.” for borrowers and taxpayers.
company behind the scenes
Maximus, for its part, has expressed its intent to provide high quality service to student loan borrowers as the payment moratorium ends. Maximus spokeswoman Elaine Cassidy Rivera said in a statement to Yahoo Finance that the company is “committed to ensuring a smooth transition for student loan borrowers” and helping borrowers manage a repayment restart in 2022.
But Yu and other advocates have also expressed concern that Maximus, despite being a government contractor Over the years, it has been largely out of the public eye and does not provide the same services as Navient.
Maximus so far manages debt collection and management for ED, According to the blog by the Student Borrower Protection Center (SBPC). Yu said not many borrowers are aware of the company’s existence.
“Maximus is a company that hasn’t come under a lot of public scrutiny. It’s a service, but it doesn’t perform the functions that Navient does, [the Pennsylvania Higher Education Assistance Agency], and the other doing so,” Yu explained. So we don’t have a track record of how to help borrowers navigate income-based repayment. “
Being a “behind-the-scenes company,” she added, “It’s worrying that Navient can only pick her surrogate and pick someone who is not in the public eye and doesn’t have a track record.”
Navient has long been in the crosshairs of progressive advocates and lawmakers who believed the company was responsible for shoddy services, such as Directing Student Loan Borrowers to High-Cost Repayment deceptive plans or practices of New Jersey to me Washington.
welcomed her departure.
“Navient has spent decades misleading, cheating, and abusing student borrowers. The Federal Student Loan Program would be much better off without them,” Senator Elizabeth Warren (Democrat-MA) said in a statement.
She continued, “Ultimately, the student loan system has broken down. The only way to ensure that borrowers don’t encounter the same predatory behavior from Navient’s replacement is to cancel student debt, so that no borrower’s future is held hostage by companies taking advantage of their financial plight.”
Arthy is Yahoo’s finance reporter. She can be reached at email@example.com. Follow her on Twitter Tweet embed.