One of the largest student loan providers will no longer lend to students. Navient announced that it is severing lending ties associated with the U.S. Department of Education and transferring its contract to Maximus, a health and human services company. The development has left about six million borrowers without a lender while they wait to be matched.
“The companies have signed a definitive agreement to transfer the loan servicing for U.S. Department of Education-owned student loan accounts from Navient to Maximus through a contract novation, subject to the Department’s approval,” reads a statement released by Navient.
The contract transfer will be implemented in the upcoming quarter beginning Oct. 1st.
“Navient is pleased to work with the Department of Education and Maximus to provide a smooth transition to borrowers and Navient employees as we continue our focus on areas outside of government student loan servicing,” said Jack Remondi, Navient President and CEO. “Maximus will be a terrific partner to ensure that borrowers and the government are well served, and we look forward to receiving FSA approval.”
Interestingly, educational costs and student loan debt has increased significantly as more and more people of color and individuals who fall under protected classes have obtained higher education over the years. As it stands, the total amount of student loan debt in the U.S. equates to $1.73 trillion. Nearly 43.2 million students are in debt, with most owing between $37,105 and $39,351 for those with only undergraduate degrees, according to EducationData.org.
Black students are more likely to borrow federal loans with a total of 49.4% borrowing. White students who borrowed owe 54% of the national student loan debt balance. Out of all demographics, Asian student borrowers are least likely to receive federal loans at 62%. The CARES Act of 2020 supposedly relieved 35 million borrowers of student loan debt.
