Navient borrowers have lower chance of defaulting on student loans

Student loan borrowers working with Navient, the largest student loan servicer in the United States, were 38 percent less likely to default on loans compared to borrowers who used other loan servicers, according to a statement released by Navient on Sept. 30. (Screenshot)

Student loan borrowers working with Navient, the largest student loan servicer in the United States, were 38 percent less likely to default on loans compared to borrowers who used other loan servicers, according to a statement released by Navient on Sept. 30.

The corporation also made headlines in August when the Huffington Post reported that the Consumer Financial Protection Bureau had been investigating Navient for the past two years, compiling evidence concerning the corporations alleged violations of consumer protections laws.

As a loan servicer, Navient collects interest and principal payments on federal government educational loans. The corporation manages $300 billion in loans and was founded in 2014 after Sallie Mae split into two entities, Navient and Sallie Mae Bank.

Allegations of wrongdoing by Navient surfaced in May 2014 when the Federal Deposit Insurance Corporation settled with Sallie Mae Bank and Navient Solutions Inc. for deceptive practices regarding student loan borrowers. The entities were ultimately required to pay $30 million to affected borrowers and to create a $60 million settlement fund to remediate active duty service members for past practices of student loan cheating.

In an announcement on Sept. 30, President and CEO of Navient Jack Remondi said that the company is “committed to helping (their) student loan customers successfully repay their loans.” 

"Throughout the repayment process, contact is key. When we can make contact with a past-due federal loan borrower, nine times out of 10, we can help him or her avoid default. Conversely, 90 percent of those who default on their federal loans have not responded to our outreach over the year it takes to reach default” Remondi said.

Navient’s statement was released the same day that the U.S. Department of Education released a press statement with data showing decreases in rates of student loan default. The rate of federal student loan cohort default decreased from 13.7 percent in fiscal year 2011 to 11.8 percent in fiscal year 2012. The cohort default rate measures how many borrowers defaulted on their loans in the three-year repayment period from Oct.1, 2011 to Sept. 30, 2014.

Remondi stressed the company’s focus on interacting with customers and reported that it made 170 million communications with its borrowers through various platforms including email and phone calls and text message. Navient said 18 percent of its borrowers have repayment plans based on borrower income, lessening the financial burden on its customers.

Not all of Navient’s 12 million borrowers have had a positive experience with the corporation. In addition to the legal action taken against Navient, borrowers have voiced their own criticisms. 

According to the Better Business Bureau, more than 2,000 closed claims have been lodged against Navient in the last three years. More than half of Navient’s closed claims deal with billing and collection issues and another 636 closed claims were made because of problems with the product or service. Navient is not BBB accredited. 

Navient’s statement from Sept. 30 did not mention any information regarding its legal problems or customer complaints. Remondi focused on their low default rate and expressed pride in Navient’s attempts to make positive differences for borrowers. 

“The complexity and number of repayment options can be overwhelming to borrowers,” Remondi said.


Brittany Cangelosi is a campus correspondent for The Daily Campus. She can be reached via email at brittany.cangelosi@uconn.edu.