Navient Loan Ownership: Who's The Real Boss?

Navient is a student loan servicer that acts as a middleman between borrowers and lenders. In 2021, Navient stopped managing federal student loans and began transferring its remaining student loan portfolio to Aidvantage and MOHELA. MOHELA is a non-profit, governmental corporation that helps families repay their student loans and is one of the largest student loan servicers in America. Navient has faced legal allegations of loan mismanagement and mistreatment of federal student loan borrowers. As a result, the Consumer Financial Protection Bureau (CFPB) banned Navient from re-entering the federal student loan servicing business and required the company to pay $100 million in restitution to affected borrowers.

Navient transfers student loan portfolio to MOHELA

Navient is a student loan servicer that has been accused of mistreating federal student loan borrowers. In July 2020, Navient ended its contract with the Education Department, citing that the department sought to transfer too much risk to the servicer at unprofitable rates. Navient has since transferred its student loan portfolio to MOHELA, a non-profit, governmental corporation dedicated to helping families successfully repay their student loans.

MOHELA is one of the largest student loan servicers in America, with over 40 years of experience. The transfer of loans from Navient to MOHELA began on October 21, 2024, and borrowers can now access their online accounts at servicing.mohela.com. MOHELA is not purchasing or merging with Navient, but simply replacing Navient as the servicer of the loans. This means that borrowers will continue to receive communications and repayments will be handled by MOHELA, but the loan agreement remains between the borrower and the loan owner.

MOHELA will work with borrowers on repayment plans and will assist with other issues related to their student loans. The interest rates on existing loans will remain the same, and any repayment plan options and borrower benefits provided in the loan agreement will continue under MOHELA's servicing.

The transition from Navient to MOHELA has raised concerns about MOHELA's ability to handle the influx of new loans. Senator Elizabeth Warren has highlighted MOHELA's existing issues with servicing failures and backlogs, with at least 2.5 million borrowers affected by various servicing failures in 2023. Borrowers are advised to keep detailed records of all communications with MOHELA and to use written communication when possible to maintain a paper trail.

Navient's history of federal student loan servicing

Navient, formerly known as Sallie Mae, was once the largest student loan servicer in the United States. In 2017, it serviced student loans for more than 12 million borrowers, including over 6 million accounts under its contract with the Department of Education. The company serviced more than $300 billion in federal and private student loans.

However, Navient has a long history of regulatory violations. In 2014, the Department of Justice and the Federal Deposit Insurance Corporation ordered Navient and Sallie Mae to pay almost $100 million for illegally overcharging nearly 78,000 servicemembers. In 2021, the Department of Education ordered Navient to return more than $22 million in overcharges. The following year, in 2022, 39 state attorneys general announced a $1.85 billion settlement with Navient for predatory student loans and forbearance steering practices.

Navient's contract with the Department of Education to service Direct Loans ended in 2021. The company signed an agreement to transfer its federal student loan servicing for Department of Education-owned accounts to Maximus, another student loan servicer. Navient stopped servicing federal student loans after December 31, 2021, and all federal loans in the Navient portfolio were transferred to Aidvantage.

In 2024, the Consumer Financial Protection Bureau (CFPB) permanently banned Navient from re-entering the federal student loan servicing business. As part of the settlement, Navient must pay $120 million in restitution and penalties, with $100 million going to affected borrowers and $20 million to the CFPB's victim relief fund. Navient has also said that it will offload its private and FFELP student loan portfolio to MOHELA.

Navient's private student loan options

Navient has been a student loan servicer for federal and private student loans. However, Navient stopped servicing federal student loans in 2021 and has since transferred all federal student loans to Aidvantage, a new company created by Maximus Education.

Navient continues to service private student loans owned by private lenders, such as Tuition Answer and Signature student loans. The company holds $17 billion worth of private education loans.

If Navient is your current or former student loan servicer, your loans are now serviced by MOHELA, a non-profit, governmental corporation. MOHELA is not purchasing or merging with Navient, but simply replacing it as the servicer of your loans. Your Auto Pay enrollment and repayment plan options will automatically transfer to MOHELA.

It is important to note that MOHELA will work with you on repayment plans and will assist you with other issues related to your student loans. Servicing transfers are a normal business practice, and while your new servicer, you can continue to receive your communications and access your online account in the same way as before.

Aidvantage: the new company servicing Navient's federal student loans

Navient has been a prominent name in the student loan business for a while now, but the company has been marred by allegations of mistreating federal student loan borrowers. As a result, Navient stopped servicing federal student loans in 2021 and transitioned to a new company, Aidvantage, to manage its federal student loans.

Aidvantage is a new company created by Maximus Education to service the federal student loans previously serviced by Navient. To make the transition easier for borrowers, Navient changed the contact information, including the phone number, general mailing address, and payment address, to Aidvantage's controls. Borrowers can also use the same login information they used on Navient's website on Aidvantage.com and keep their autopay setup.

Navient's student loan portfolio is split between private student loans and commercially held loans from the Federal Family Education Loan Program (FFELP). The company holds $38 billion worth of FFELP loans and $17 billion worth of private education loans. While Navient has stopped servicing federal student loans, it continues to service FFELP and private student loans.

In early 2024, Navient announced that it would offload its private and FFELP student loan portfolios to MOHELA, a non-profit, governmental corporation dedicated to helping families successfully repay their student loans. MOHELA is one of the largest student loan servicers in America, with over 40 years of experience. The transfer of loans to MOHELA began in July 2024 and was completed on October 21, 2024.

MOHELA is not purchasing or merging with Navient, and borrowers do not need to take any action. Borrowers can continue to access their online accounts at servicing.mohela.com and use their existing login information. MOHELA will work with borrowers on repayment plans and assist with other issues related to their student loans.

Navient's legal issues and lawsuits

Navient, a major servicer of private and federal student loans, has been the subject of multiple legal issues and lawsuits in recent years. The company has faced allegations of mistreating federal student loan borrowers and has been accused of misleading borrowers, improperly handling loan repayments, and other violations.

In January 2017, the Consumer Financial Protection Bureau (CFPB) and six state attorneys general filed lawsuits against Navient, asserting various allegations. The CFPB's lawsuit, which is still ongoing as of 2024, alleges that Navient engaged in unfair and deceptive practices, such as steering borrowers into forbearance instead of income-driven repayment plans, which caused their interest to accrue and payments to increase. The lawsuit also alleges that Navient mishandled payments for borrowers with multiple loans, leading to late fees and negative credit reporting.

Navient has denied any wrongdoing and has defended its practices, stating that it provided clear and easily understood notices to borrowers about their repayment options and accurately processed tens of millions of borrowers' payments each year. However, in 2022, Navient agreed to settle with state attorneys general to resolve all previously disclosed multistate litigation and investigations, delivering $1.7 billion in debt cancellation to approximately 66,000 private loan borrowers.

In addition to the CFPB lawsuit, Navient has faced legal action from state attorneys general and federal authorities. Tens of thousands of borrowers have lodged complaints about their dealings with Navient, and the company has paid over $2 billion in previous settlements related to mishandling student loans. As a result of these settlements, borrowers who experienced issues such as payment mismanagement, credit reporting problems, and misallocation of payments may be eligible for financial relief.

Navient's role in federal student loan servicing has come to an end, with the company transferring its loan portfolio to new servicers, including Maximus (Aidvantage) in 2021 and MOHELA in 2024. However, many borrowers continue to report similar issues with the new loan servicers, indicating that the problems they faced with Navient have persisted.

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