News that Wilmington-based loan servicer Navient snapping up online student lender Earnest ended up being upstaged.
The announcement of the deal came at around the time the Pennsylvania Attorney General sued Navient over its business practices. Navient vehemently denies the allegations.
While the timing wasn’t ideal, the acquisition of San Francisco-based Earnest indicates that the company that split off from Sallie Mae a few years back has decided to move into a crowded arena.
(See story below on the cash deal).
In the process, the Wilmington company becomes at least an indirect competitor of Sallie Mae, which spun off Navient a few years ago so it could focus on the lending side of the student loan business. Navient focuses on the servicing area.
Navient bought Earnest for a reported $155 million or a little less than of the amount invested in a company that had ambitions of becoming a major player in the fintech world.
Earnest faces a formidable San Francisco neighbor, SofFi, which gained a presence in Delaware with the purchase of Zenbanx, a fintech company started by INGDirect founder Arkhadi Kuhlmann. Zenbanx has an employment site in Claymont.
Much larger SoFi has been making inroads in the student loan refinancing space that Earnest covets.
SoFi has problems of its own with its CEO and co-founder stepping down amid allegations of a hostile work environment for women
And I’d be remiss by not mentioning, Delaware start-up CollegeAve, which is also a player in the online student loan market.
It all adds up to an interesting and challenging opportunity for Navient, which hopes to finalize the Ernest this year.
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