Navient NAVI on Tuesday became the latest student loan servicer to announce that it plans on exiting the federal student loan servicing system. The company indicated that it will be working with the Department of Education to transfer its federal student loan accounts to Maximus, another Department contractor that operates within the federal student aid space.“Navient and Maximus announced today that the companies have signed a definitive agreement to transfer the loan servicing for U. S. Department of Education-owned student loan accounts from Navient to Maximus through a contract novation, subject to the Department’s approval,” said the company in a statement. “Navient and Maximus have submitted a preliminary request for review. The contract novation will be subject to the consent of FSA. Following receipt of all necessary approvals including FSA approval and other customary closing conditions, Navient would exit the Department of Education student loan servicing program as planned.”“Navient is pleased to work with the Department of Education and Maximus to provide a smooth transition to borrowers and Navient employees as we continue our focus on areas outside of government student loan servicing,” said Jack Remondi, Navient President and CEO in a statement. “Maximus will be a terrific partner to ensure that borrowers and the government are well served, and we look forward to receiving FSA approval.”The Department of Education noted that Navient’s proposal requires FSA approval. “FSA is reviewing documents and other information from Navient and Maximus to ensure that the proposal meets all legal requirements and properly protects borrowers and taxpayers,” said the Department of Education in a statement. Navient is just the latest major student loan servicer to announce its exit from the Department of Education’s student loan system. In July, two other major student loan servicers — Granite State Management and Resources, and FedLoan Servicing (which handles the Public Service Loan Forgiveness program) — also announced their abrupt departure. The student loan servicing shakeup may cause headaches for the Biden administration. Before Navient’s announcement, the Department was already trying to determine where it was going to transfer the 10 million student loan borrower accounts handled by FedLoan Servicing and Granite State. The Department may now have to contend with millions of additional account transfers from Navient — all while tens of millions of borrowers get closer to resuming repayment on their federal student loans, which have been paused since March of last year. The Biden administration has indicated that its latest extension of the student loan payment pause to the end of January 2022 would be the final extension of relief. Key Biden officials have been expressing concern about the return to repayment.


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