- Navient, one of the largest student loan companies, has announced plans to end its state loan services.
- Elizabeth Warren said his exit will “do far better for” the state student loan industry.
- She cited decades of abuses by the company, including pushing borrowers into deeper debt.
The student loan industry received another major upheaval on Tuesday when Navient became the third company to announce its plans to end its federal student loan program amid regulatory action last year.
Massachusetts Senator Elizabeth Warren had a message for the company: get well soon.
“Navient has spent decades misleading, defrauding and abusing student borrowers,” Warren said in a statement to Insider. “The federal student loan program will be much better off without them.”
Navient, which collects the federal student debt of six million borrowers, said in a press release that it is working with the Department of Education to approve the transfer of those borrowers to another student loan company, Maximus.
The announcement follows the announcement by the Pennsylvania Higher Education Assistance Agency (PHEAA) and Granite State Management and Resources in June that they will end their maintenance contracts this year. As Navient follows her lead, nearly 16 million borrowers will pay off their student debt to new businesses once the February hiatus is lifted.
Jack Remondi, CEO of Navient, said in a statement, “Navient is excited to work with the Department of Education and Maximus to help borrowers and Navient employees make a smooth transition while we continue to focus on areas outside of government student loan administration.”
Warren, who had her sights set on both PHEAA and Navient for decades, knew that their plans to close them were a good thing for borrowers. She said in June that the 8.5 million borrowers served by PHEAA could “breathe a sigh of relief” from having to deal with the company, and Warren told Insider in a July interview that “the days are over are “when student lending institutions could do a” terrible job “.
“The world has changed for student loan borrowers,” Warren said. “You can’t sign a contract, do a lousy job, cost borrowers a lot of money, and still have their contracts renewed.”
Warren is fighting to hold Navient accountable even before her election to the Senate. Insider covered the full story Warren had with Navient in April, beginning in 2006 when she was interviewed on 60 Minutes, and quoted Sallie Mae, as Navient was formerly known, for her abuse of the student credit system.
Since then, she has repeatedly called on the company for illegal practices with borrowers, such as in November 2018 when Warren released an audit demonstrating that Navient implicated students in deeper student debt by “indulging student borrowers than they did.” was “. often the worst financial option for them. ”
Most importantly, during an April hearing where she invited the CEOs of all student loan companies to testify, she told Navient CEO John Remondi that he should be fired for the abuses under his leadership.
Richard Cordray, director of the Federal Student Aid Office (FSA), said during his remarks at a conference earlier this month that student loan companies would rather close than become more accountable. He did not comment on individual companies, but noted that “not all of them were enthusiastic” about his plans to strengthen industry supervision.
Warren told Insider that although the three companies are shutting down their student loans, “she will continue to fight for greater accountability and better service to borrowers during and after the upcoming transitions.”
“Ultimately, the student loan system is broken,” said Warren. “The only way to ensure borrowers do not face the same predatory behavior from Navient’s detachment is to cancel the student debt so that a borrower’s future is not held captive by companies profiting from their financial plight.”