A second major federal student loan manager is calling for its cessation, a move that will force the education ministry to transfer the accounts of millions of borrowers just as the government begins to resume collection of payments early in the year. ‘next year.
Navient said on Tuesday he wanted to end his contract with the federal government and offload his responsibilities to Maximus, another federal loan manager. Navient manages the accounts of approximately six million borrowers.
Jack Remondi, chief executive of Navient, said the company wanted to “provide a smooth transition for borrowers” as it focused on businesses other than the Federal Student Loans Service.
The Department of Education “reviews documents and other information from Navient and Maximus to ensure the proposal meets all legal requirements and properly protects borrowers and taxpayers,” said Richard Cordray, director of operations for the office. federal student aid department, in a statement.
Two months ago, another major federal supplier, FedLoan, said it wanted to pull out as well. The departures will leave the Department of Education scrambling to move more than 15 million borrowers to new services – a process that has in the past been chaotic and error-prone.
Almost all federal student loan borrowers have skipped their payments thanks to a moratorium on collections the government imposed in March 2020 in response to the coronavirus pandemic. But those bills are set to return: The Biden administration has announced plans to resume collection on Jan.31.
Navient will not be entirely done with the federal student loan sector if his application is successful. The company is the subject of a lawsuit filed by the Consumer Financial Protection Bureau in 2017 over what the federal agency said was a series of misdeeds and mistakes that hampered borrowers trying to repay their loans.
“This case continues to weave its way through the slow – very, very slow – court process,” Remondi told analysts on a recent earnings conference call. “We can’t wait to spend our day in court. “