The Education Department on Wednesday approved an agreement for Navient, one of the nation’s largest student loan companies, to transfer the portfolio it manages on the agency’s behalf.
The transfer arrives at a critical time for the Education Department. The agency is preparing for some 41 million Americans to reenter repayment of their federal student loans in February, nearly two years after the federal government suspended collection in the wake of the coronavirus pandemic.
Consumer groups and lawmakers worry the departure of Navient and other servicing companies could be disruptive as borrowers migrate back into the system. While the department routinely transfers accounts between servicers, the number of accounts in play gives some advocates pause. Other large-scale transfers, such as the disbursement of ACS Education Services’ portfolio, resulted in widespread errors.
Richard Cordray, who heads the Education Department’s Federal Student Aid office, said the federal agency “will make this transition as seamless as possible.”
He said borrowers will not lose access to their payment histories or account data. They will not need to change their current log-in information or automatic payment arrangements.
“Our confidence in this novation is bolstered by the fact that Maximus will be held to the stronger standards for performance, transparency, and accountability that FSA included in its recent servicer contract extensions,” Cordray said in a statement Wednesday.
Operating under the name Aidvantage, Maximus will begin servicing the 5.6 million federal student loan accounts this winter, according to Navient. Once the loans have been reassigned, Aidvantage will send borrowers a welcome letter.
Only federal loans owned by the Education Department are being transferred, not those originated through the defunct Federal Family Education Loan (FFEL) Program and held by private companies.
