Navient announces the release of the federal student loan management system

Navient announced on Tuesday that it had agreed to transfer its service contract to student loan company Maximus, ending its participation in the federal student loan service program. The move is subject to the approval of the US Department of Education (DOE).

“Since we declined the department’s Next Gen service contract in 2020, we have explored options to ensure an easy path for borrowers and provide ongoing work to dedicated members of our team,” said Jack Remondi, President and CEO of Navient, in a statement. “This solution provides a smooth and win-win transition for borrowers, our team members and the Department of Education.”

Maximus is already working with the DOE to manage the service to defaulting borrowers.

“The deal, if approved by education ministry officials, would represent one of the most dramatic upheavals in the way the federal government collects student loans in recent years,” said Politics.

Navient manages the federal student loan accounts of nearly 6 million borrowers who collectively owe about $ 283 billion, according to Politics.

Earlier this year, student loan managers Granite State Management and the Pennsylvania Higher Education Assistance Agency also announced that they would not continue their federal student loan management contracts with the DOE, previously reported. reported the ACA.

“Navient is pleased to work with the Department of Education and Maximus to ensure a smooth transition for borrowers and Navient employees as we continue to focus on areas other than government student loan servicing,” said Remondi said in a press release. “Maximus will be a great partner in ensuring borrowers and government are well served, and we look forward to receiving FSA approval.”

As part of the proposed transaction, many Navient employees of the DOE loan management team will be transferred to Maximus.

The novation of the contract is expected to be finalized in the quarter starting October 1, 2021, according to Navient.

“The FSA 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, head of federal student aid, in a press release.

Federal student loan payments are currently on hold until January 2022 due to the COVID-19 pandemic.