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.
The post 2.7 Million Student Loan Borrowers at Risk Due to Navient’s Data Transfer first appeared on Swift Feed.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.