As Navient, one of the nation’s major servicers, announced its exit, millions of student loan accounts would be transferred to a new provider.
Big Student Loan Account Change: Millions of Borrowers Will Switch Servicing Companies
Navient, which has serviced private and federal student loan accounts since splitting from Sallie Mae a decade ago, has signed a binding letter of intent with MOHELA to outsource the servicing of privately held student loan portfolios and Federal Family Education Loan commercial loans.
About 2.7 million debtors will be affected by the 18–24-month outsourcing procedure starting this year. The student loan account ownership will remain with Navient after the transfer. President and CEO David Yowan said the move will streamline Navient’s operations, decrease expenses, and provide financial and operating flexibility.
MOHELA’s selection as the new servicer has sparked worries. The Department of Education withdrew $7.2 million from MOHELA in October for failing to provide billing statements on time to 2.5 million borrowers, causing 800,000 borrowers to fall behind on their payments. MOHELA’s debt repayment and servicing of a large chunk of the federal government’s direct student loan accounts portfolio have drawn scrutiny.
Ongoing Oversight Amidst Navient-MOHELA Transition!
Deputy Executive Director and Managing Counsel of the Student Borrower Protection Center Persis Yu stressed the need for regulators and politicians to constantly monitor Navient-MOHELA account transfers. MOHELA’s prolonged call wait times, invoicing difficulties, and documentation backlogs are concerns. Yu warned of student loan accounts system concerns.
The resumption of loan repayment last fall complicated the market, as over 30 million student loan account borrowers had servicing transfers in the two years preceding Navient-MOHELA. Borrowers should stay informed about this momentous transformation and its effects on their student loans. The move raises questions about the student loan system and how to protect borrowers.