Wilmington-based Navient and Maximus announced the companies have signed an agreement to transfer the loan servicing for U.S. Department of Education-owned student loan accounts from Navient to Maximus, subject to government approval.
The portfolio would join the FSA (federal student aid) portfolio at Maximus.
“Navient is pleased to work with the Department of Education and Maximus to provide a smooth transition to borrowers and Navient employees as we continue our focus on areas outside of government student loan servicing,” said Jack Remondi, CEO. “Maximus will be a terrific partner to ensure that borrowers and the government are well served, and we look forward to receiving FSA approval.”
Navient was spun off from student lender Sallie Mae to handle student loan servicing. The company has been working to diversify its business mix as it faces lawsuits, including a long-running action from the federal Consumer Protection Finance Bureau that dates back to 2017.
Despite the pro-business stance of the Trump administration, the CPFB did not drop the lawsuit, which is now winding its way through the courts. Prospects of the suit going away dropped to zero in a Biden Administration under pressure from progressive Democrats to forgive federally-backed loans.
Navient continues to defend its servicing practices, claiming it enjoys a high level of customer satisfaction.
Navient stock has languished since its founding but is near an all-time high with word of the deal.
Richard Cordrey, who formerly headed the CFPB and now is in charge of the student aid side of the U.S. Department of Education, said the DOE “has been monitoring the contract negotiations between Navient and Maximus for some time and now is considering a formal proposal for Maximus to assume Navient’s contract with FSA to service Department-held student loans. This substitution, called a “novation,” by law requires FSA approval.”
“FSA is reviewing documents and other information from Navient and Maximus to ensure that the proposal meets all legal requirements and properly protects borrowers and taxpayers,” Cordrey stated. “We remain committed to making sure that our federal student loan servicing agreements provide more accountability, meaningful performance measures, and better service for borrowers. FSA looks forward to working with servicers committed to fulfilling these requirements as they do the important work to service more than 40 million federal student loans.”
“We look forward to the successful completion of this contract novation and working in partnership with Navient and FSA in the successful migration of operations for this critical function. We are pleased to further our strong track record of supporting FSA as we expand into federally originated student loan servicing,” said Teresa Weipert, general manager for the Maximus U.S. Federal Services Segment. “This contract enables Maximus to apply our deep understanding of the needs of student borrowers and our industry-leading customer service to assist FSA in successfully serving millions of student loan borrowers.”
Under the proposed transaction, many Navient employees on the Department of Education loan servicing team will transfer to Maximus.
If the Education Department goes along, the transaction is expected to be completed in the final quarter of this year.
Maximus is a company that operates worldwide with one of its entities devoted to government services, such as student loans. Maximus is based in northern Virginia.