Washington (CNN)Embattled student loan servicer Navient announced this week that it is getting out of the federal student loan business, pending government approval.
If it gets the authorization, about 6 million loan borrowers will be sending their monthly payments to a new servicer. Navient plans to transfer those loans to Maximus, a company that already contracts with the Department of Education to service student loans in default.
The agency is reviewing documents from Navient and Maximus to “ensure that the proposal meets all legal requirements and properly protects borrowers and taxpayers,” said Richard Cordray, the chief operating officer of federal student aid, in a statement.
Navient was sued in 2017 for allegedly processing payments incorrectly by the Consumer Financial Protection Bureau when Cordray was at the helm of that federal agency. Navient has denied the allegations and the lawsuit is ongoing. It has also faced lawsuits from several state attorneys general.
The company has been a repeated target of consumer advocates and progressives, including Sen. Elizabeth Warren, a Massachusetts Democat who earlier this year called on the government to fire Navient.
“Navient’s conduct has left millions of borrowers confused and paying more for longer, and has stopped them from obtaining the relief they are entitled to,” said Persis Yu, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, in a statement this week.
