Navient borrowers: meet your new student loan manager
THROUGH Sydney lake21 October 2021, 15:20
A student uses his laptop on the Dartmouth College campus, seen in October 2021. (Photographer: Bing Guan â Bloomberg / Getty Images)
It’s official: Navient exited the federal student loans department with immediate effect. The US Department of Education on Wednesday approved the company’s proposal to transfer the lending department of 5.6 million student loan accounts owned by the Department of Education to Maximus, a federal contracting company.
At the end of September, the education loan management company Navient announced its intention to stop managing federal student loans held by the Department of Education, transferring its activities to Maximus. Navient will however retain its private student loan management activity.
“We are confident this decision is in the best interests of the estimated 5.6 million federal student loan borrowers who will be served by Maximus and provide the stability and high quality service they deserve,” Richard Cordray, Principal of the exploitation of federal student aid, says in a declaration Wednesday.
Why does the Department of Education have such confidence in Maximus, a seemingly foreign company that serves federal student loans? Here is what we know.
Why Maximus replaces Navient
Maximus is a federal contractor based outside of Washington, DC. He is best known for his huge health care, social services and technology contracts with the federal government. The company helps operate the Centers for Medicare & Medicaid Services and in May 2021 landed a potential $ 951 million contract to support the Centers for National COVID-19 Vaccine Assistance and Vaccine Assistance Hotline. Disease Control and Prevention.
While Maximus has recently focused more on the healthcare industry, the company already had strong ties to the education department prior to the Navient transaction. Maximus worked on contracts for the department’s debt management and collection system and business operations.
“This contract allows Maximus to apply our in-depth understanding of the needs of student borrowers and our industry-leading customer service to help the FSA successfully serve millions of student loan borrowers,” said Teresa Weipert, Segment General Manager of the US Federal Services of Maximus. in a September 28 statement.
In addition, it appears that the FSA trusts Maximus more than the former student loan manager; Navient had a questionable past with the Federal Student Loans Service. In December 2020, nine borrowers filed a class action lawsuit alleging that Navient fraudulently allocated payments to extend the term of millions of federal student loans. In June 2021, a New Jersey federal judge said borrowers could take legal action.
The FSA already seems less concerned now that Maximus is taking over the management of Navient’s federal student loan accounts.
“Our confidence in this [transaction] is reinforced by the fact that Maximus will be required to meet the higher standards of performance, transparency and accountability that FSA has included in its recent service contract extensions, âCordray said in its statement.
How the change will happen
Student loan managers and the FSA have not shared any additional details about how borrowers will be affected by the change and how the transfer will happen, other than insisting that there will be a “transition.” successful ‘accounts of borrowers.
Navient said borrowers would be transferred to Maximus’ service division, Aidvantage, by the end of the year after “a series of communications to borrowers”. The loans will remain on their current service platform owned by Fiserv, according to Navient.
âFSA, Navient and Maximus will communicate directly with borrowers on how this change affects them,â Cordray said in a statement. âAs proof of our commitment to improving the borrower experience with federal student loans, we will make this transition as seamless as possible. “
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