Navient plans to outsource its student loan servicing business and take other steps to cut costs.
Navient has corporate operations in Wilmington.
“After a thorough review, we are announcing targeted actions intended to simplify our business, reduce our expense base, and increase our financial and operating flexibility,” said David Yowan CEO of Navient. “Over the longer-term, we believe these actions will increase the value shareholders derive from our loan portfolios and the returns we can achieve on business-building investments. As we embark on this important work, we also remain focused on running and growing our business and meeting the needs of our borrowers and clients. We look forward to continuing to provide updates as we establish a new foundation for Navient’s future success.”
Navient has entered into a binding letter of intent that will transition its student loan servicing to MOHELA, a provider of student loan servicing for government and commercial enterprises.
In addition, Navient launched a process to review options for its business processing operations, including its sale.
The moves could reduce expenses by $400 milliion, depending on what happens with the business processing operations, a release indicated.
The restructuring will get under way this year and would be to be largely complete over the next 18 to 24 months.
Navient was spun off from Newark-based Sallie Mae a decade ago, but has seen its stock price remain stuck below $20 a share during its existence. The company has with dealt lawsuits from states and issues with federal government scrutiny over servicing federal student loans. It reached a large settlement over a lawsuit, while denying wrongdoing. (See story below)
Shares of Navient dropped 5% in Thursday trading.