Why Shares of Navient Fell Today | The Motley Fool

What happened

Shares of student loan servicer Navient (NASDAQ:NAVI) closed Wednesday’s trading session down by almost 14% after the company said it had agreed to transfer the servicing of its U.S. Department of Education loans to Maximus (NYSE:MMS).

So what

Servicing those loans only provided about 6% of Navient’s revenue. But it is yet another shoe to drop in the federal student loan market — two other prominent servicers of those loans exited the business in July. The Biden administration was already trying to determine where to transfer those 10 million accounts. Navient adds another 5.6 million borrowers to the list.

Payments on federal student loans were suspended without penalty or interest early in the pandemic, and the suspension has been extended four times. The latest — extending the moratorium through January — will be the last, according to Department of Education officials. That may be contributing to the servicers wanting to get out of the business. The pause in loan repayments has benefited 41 million Americans.  

Now what

Navient and Maximus have submitted a preliminary request for review of the transaction to the office of Federal Student Aid (FSA) — part of the Department of Education. The two companies have indicated they will work with FSA, as the deal will require its approval. 

The Education Department has said it will review all relevant documents once they are submitted to ensure that the deal protects borrowers and taxpayers, as well as meets the relevant legal requirements.

Navient was a unit of Sallie Mae until 2014. Over the years, Navient has been constantly accused of mistreating borrowers. It was sued by the Consumer Financial Protection Bureau in 2017 — a case that is still working its way through the courts. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Most Related Links :
newsbinding Governmental News Finance News

Source link

Back to top button