Navient’s Data Transfer Raises Alarm for Student Loan Borrowers

2.7 million student loan borrowers across the country could be affected by Navient’s decision to transfer data to MOHELA, a company that has already been investigated and punished for a number of controversies.

Navient’s Loan Switch

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Navient, a major private student loan servicer, has controversial plans to move its current loan data to MOHELA.

Impact on Loan Portfolio

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This decision could affect 2.7 million current and former students whose loans are owned and serviced by Navient.

Statement to Transition

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“Navient has entered into a binding letter of intent that will transition its student loan servicing to MOHELA, a leading provider of student loan servicing for government and commercial enterprises,” Navient said in a statement.

Transition Timeframe

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The outsourcing initiative, set to take place this year, will take around 18 to 24 months, but it hasn’t come without its controversies.

A Seamless Transition

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The statement from Navient said, “Navient and MOHELA will work toward ensuring a seamless transition in the coming months.”

Outsourcing Decision

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MOHELA is one of the federal student loan servicers, and Navient says that the transition process is set to commence this year.

Business Simplification Goals

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Navient’s President and CEO, David Yowan, said that the move’s objective is to “simplify our business, reduce our expense base, and increase our financial and operating flexibility.”

An Uninterrupted Service

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Navient assured that during the transition process, they would provide “customers with uninterrupted servicing of their loans.”

MOHELA’s Controversial Status

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Critics are concerned over the selection of MOHELA as the outsourcing partner, given its recent controversies surrounding customer service.

Scrutiny and Errors

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MOHELA has been under the microscope for sending late bills to borrowers and even taking out incorrect direct debits from bank accounts.

MOHELA’s Punishment

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MOHELA faced repercussions in October when the Education Department penalized the company for failing to provide timely billing statements to 2.5 million borrowers, resulting in the withholding of over $7 million in pay.

Cracking Down on Service Providers

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The Education Department said in a statement, “The department will continue to conduct stringent monitoring of all servicers.”

Improvements to Services

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The department also insisted it had “instituted several strategies to detect any errors swiftly and take corrective action to hold servicers accountable for meeting their obligations.”

Scrutiny on Navient

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Navient also faced accusations of predatory behavior by Democratic lawmakers, including Sen. Elizabeth Warren.

Misleading Customer Allegations

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Warren accused the company of misleading borrowers to purchase products that they couldn’t afford.

CEO’s Response to Allegations

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Navient’s CEO, John Remondi, dismissed allegations during a 2021 hearing, asserting, “These allegations are not true.”

Full Steam Ahead Despite Concerns

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As the Education Department shows its concerns about the transition to MOHELA, both companies seem set on making this as smooth a transition as possible.

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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.

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