In recent years, Navient Student Loans has been one of the major providers of federal student loans. With millions of loans offered to students, the company has spent years establishing itself as a loan provider. However, on October 2021, Navient Student Loans decided to withdraw from the federal student loan industry entirely, leaving many of its clients confused about what comes next for them and their loans. In this article, we examine some of the key facts that you need to know about Navient, both in terms of what it was and what is happening to the company and its loans now that it has decided to leave the student loan industry.
1 – Navient’s Loans Haven’t Disappeared
At the time it announced its intention to leave the federal student loan industry, Navient Student Loans was servicing 5.6 million student loan accounts owned by the U.S. Department of Education. The good news is that these accounts are not going to disappear now that Navient is no longer servicing them. Instead, all 5.6 million accounts will transfer to a provider called Maximus, which is a federal contracting company. Based in Washington D.C., Maximus is better known for providing services related to healthcare and technology. However, the company has worked closely with the Department of Education in the past, having helped to create collections and debt management systems.
2 – Navient Student Loans Is Currently Being Sued
Perhaps part of the reason why the Department of Education was so keen to move away from working with Navient Student Loans is the fact that the company is currently dealing with several legal issues. Chief among these is a lawsuit filed by the U.S. Consumer Financial Protection Bureau, alongside attorneys in Washington and Illinois, in January 2017. This lawsuit was followed by a further filing by Pennsylvania’s attorney general in October 2017, with the attorney generals of Mississippi and California following suit in 2017. Also know about 5 Habits of A Successful Forex Trader.
The lawsuits make several allegations against Navient Student Loans, including:
- The company has misallocated payments on many occasions since January 2010.
- Navient has steered struggling borrowers away from income-driven repayment options and towards loan forbearance.
- The company purposefully provided unclear or misleading information about how to qualify for co-signer release and how to re-enroll in an income-driven repayment plan.
Navient states the allegations are unfounded. However, this is hardly the first time the company has found itself in hot legal waters, as it also settled a lawsuit filed by the American Federation of Teachers in June 2020. Simply put, Navient Student Loans seems to find itself in legal trouble more often than not in relation to its student loan business.
3 – You Can Still Get a Loan With Navient
Though Navient Student Loans has withdrawn from offering federal student loans, this does not mean that the company offers no loans at all. In fact, it is still possible to apply for a private loan through Navient, which functions in much the same way as a federal loan, with the main difference being that Navient has more control over the terms of the loan.
The company’s private loans offer a range of repayment options, including:
- A standard repayment plan that covers both the loan’s principal and interest.
- An interest-only plan, which you may use in the short-term to reduce your monthly payments.
- Extended-term programs, with the maximum possible term being 30 years.
However, based on Navient’s disclosure the vast majority of its student loans are held by students with credit scores of 640 or higher. If you have a 600 credit score most likely you’ll need to get a co-signor to get approved for a student loan with Navient.
The company also offers forbearance, co-signer release, and rate reduction programs on its private loans. Typically, you will access these loans through a private lender, with Navient servicing the loan behind the scenes.
4 – The Company Managed Billions of Dollars in Loans at Its Peak
Founded in 2014, Navient Student Loans quickly established itself as one of the top nine student loan servicing companies in the United States. At its peak, the company oversaw loans provided to more than 12 million borrowers that totaled over $300 billion. Of that, over six million clients were federal borrowers.
This offers some interesting insight into what may happen in the future for Navient. Assuming the company is still somewhere close to this peak, the loss of the federal student loans business still means that the company has approximately five to six million active private loan accounts.
5 – High Complaint Levels
Those who have had poor experiences with Navient Student Loans are not alone. In fact, the company was once the leader in client complaints about both its federal and private student loans.
A 2019 report published by the Consumer Financial Protection Bureau highlighted that the company accounted for 39% of the 1,658 complaints made about federal student loan providers between September 2018 and August 2019. When you consider the fact that there were eight other providers at this time, this is an astonishing number.
To make matters worse, the same report found that Navient Student Loans was the recipient of 57% of the 1,319 complaints lodged against private loan companies during the same period. This, coupled with the various lawsuits the company has faced, paints the picture of a loan provider that is not capable of providing quality services. The Consumer Financial Protection Bureau actually sued Navient in 2017.
Should You Apply for a Loan With Navient?
If you intended to apply for a federal student loan, the question has already been answered for you. Navient Student Loans has moved out of that area of the industry, with all of its federal operations being transferred to Maximus. As for applying for a private loan with the company, it’s advised that you carefully consider your options before you do so. Though Navient has serviced tens of millions of borrowers, proving that the company has plenty of experience, the facts we’ve covered in this article suggest that the company is far from the top of the pile when it comes to the quality of its service. With several ongoing lawsuits and a wide volume of client complaints, taking out a loan with Navient Student Loans may be more trouble than it’s worth.