Navient’s Strange History and Student Loan Exit is a Warning to Borrowers
After more corporate reshuffling and rebranding, federal loans formally serviced by Navient will soon transfer to Aidvantage, the newly created federal loan servicer of Maximus.
What does all this movement mean for borrowers?
Regulators claim that the move is in the best interest of borrowers. However, the exact benefits are murky at best.
We do know that hundreds of Navient employees are becoming Maximus employees. It isn’t clear how a new corporate entity signing their checks will mean a better experience for borrowers.
The Creation of Navient
In 2013, student loan giant Sallie Mae split into two different companies: Sallie Mae and Navient. Sallie Mae tasked Navient with handling federal student loan servicing.
At the time, Sallie Mae faced significant regulatory pressures, and many consumer advocates criticized Sallie Mae for providing lousy advice to borrowers and failing as a servicer.
Borrowers were told that Navient’s split from Sallie Mae might actually be a good thing. Why? Because the Department of Education contracts were “very specific in what companies like Navient can and can’t do for borrowers.”
Instead, Navient repeatedly faced controversy, investigations, and lawsuits.
Navient’s Checkered Past – A Timeline of Failing Borrowers
2014 – Navient is created.May 2015 – The Department of Justice announced refunds $60 million to millitary servicemembers who were charged excess interest by Navient.August 2015 – The Consumer Financial Protection Bureau warns Navient about federal law violations and threatens to sue.June 2016 – Navient shareholders sue the company for “wrongful acts” that led to share prices falling.January 2017 – The CFPB sues, alleging that Navient systematically and illegally failed borrowers at every stage of repayment.August 2018 – Navient criticized for attempting to collect debts from co-signers after the accidental deaths of students.January 2021 – Department of Education orders Navient to repay $22.3 million for overcharging the US government.As of October 2021, the Consumer Finanical Protection Bureau has received over 30,000 complaints about Navient.
Same People, Different Name
Aidvantage is supposedly different and better for borrowers.
Once again, we are told that the contract terms mean borrowers will get better servicing.
Borrowers who were around for the 2014 transition know that “strict” contract terms don’t necessarily mean better servicing.
Maybe this time will be different. Maybe the new contract terms are actually better for borrowers.
I’m not holding my breath.
The fact that hundreds of Navient employees are now Maximus/Aidvantage employees scares me. The name on the building couldn’t matter less. The guidance borrowers receive is what matters.
If the same people provide the same short-sided help for borrowers, nothing will improve.
Tips for Borrowers Stuck with Navient/Maximus/Aidvantage
New servicers are almost always an issue for borrowers. In some cases, it is a minor inconvenience. In others, the servicer transition causes major problems like missed payments and adverse credit reporting.
Sadly, borrowers don’t have the right to prevent a servicer transfer. Worse yet, borrowers have limited options for picking a new servicer.
There are several things Naivent borrowers can do right now to avoid major issues with the transition:
Update your contact info. Aidvantage will mail several important letters when the loans transfer. Missing these letters could mean missed payments.Back up your records. The Department of Education should have a record of all payments. Documents should get moved over to Aidvantage. However, mistakes happen. Borrowers can protect themselves by making copies of statements and payments on their federal loans.End automated payments. Many borrowers have their bank automatically mail a check each month. Don’t assume your bank will update the address or that the check will get forwarded. Instead, end one bill payment and create another to replace it.
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