Navient and Wells Fargo & Company announced that they have reached agreement for Navient to purchase a portfolio of federally guaranteed student loans from Wells Fargo totaling $8.5 billion in principal balance.
“We’re delighted to offer our deep expertise to benefit more than half a million new customers,” said Jack Remondi, president and CEO, Navient. “We’re also pleased to deliver on a key business objective to leverage our servicing scale and grow our portfolio. As the new name in student loan servicing, Navient is committed to working in close partnership with Wells Fargo to implement best practices that ensure an easy transition and support customer success.”
Navient is the largest service company for federal and private education loans and, with this transaction, will service more than $310 billion in student loans. Navient anticipates converting a majority of the purchased loans to its servicing platform in 2015. Rates, terms, and benefits will remain unchanged.
The purchase consists of whole loans originated under the Federal Family Education Loan Program (FFELP) before it ended in 2010. The acquisition is expected to close in a series of transactions, substantially all of which will be completed in the fourth quarter 2014, subject to customary closing conditions. The acquisition will be financed in part by a new asset-backed commercial paper facility arranged by Wells Fargo Bank N.A.
Navient services more than $300 billion in student loans. The company was created from the separation of Sallie Mae last spring. Sallie Mae is based in the Newark-Christiana area. Naivent will operate its headquarters in the Riverfront area of Wilmington. Sallie Mae now operates as a bank.
The companies have long been under fire over collection practices and their role in is now seen as a looming student loan debt crisis. Navient says it works with borrowers and has a lower rate of defaults than other lenders.
