Navient Corporation

Navient
Navient Corp.
Formerly called
 Sallie Mae
Public
Traded as NASDAQ: NAVI
S&P 500 Component
Industry Financial services
Founded 2014
Headquarters Wilmington, Delaware, U.S.
Key people
  • John (Jack) F. Remondi (President and CEO)
  • John Kane (Chief Operating Officer)
  • Somsak Chivavibul (Chief Financial Officer)
  • Tim Hynes (Chief Risk Officer)
  • Andy Beamon (Chief Business Development Officer)
  • Steve Hauber (Chief Audit Officer)
  • Pat Lawicki (Chief Information Officer)
  • Sheila Ryan-Macie (Chief of Staff)
  • Jerry Maher (Senior Vice President)
Total assets $146.4 billion (2015)[1]
Number of employees
 Increase6,000 (2015)
Website www.navient.com

Navient is a publicly traded U.S. corporation based in Wilmington, Delaware, whose operations include servicing and collecting on student loans. Managing nearly $300 billion in student loans for more than 12 million customers, the company was formed in 2014 by the split of Sallie Mae into two distinct entities, Sallie Mae Bank and Navient. Navient employs 6,000 individuals at offices across the U.S.[2]

History

Navient was established in 1973 as a Government-Sponsored Enterprise (GSE) called Student Loan Marketing Association (nicknamed Sallie Mae). The company was created by Congress to support the student loan program established by the Higher Education Act of 1965.

In 2004, Sallie Mae’s GSE charter dissolved and it became a private-sector company with an independent board.[3]

The U.S. Department of Education selected Sallie Mae in 2009 to service federal loans on its behalf.[4]

In 2010, Congress passed the Health Care and Education Reconciliation Act of 2010, which eliminated the federally guaranteed loan program known as Federal Family Education Loan Program (FFELP), under which banks and companies like Sallie Mae made loans to college students backed by a federal guarantee. As a result, effective July 1, 2010, all federal loans were originated directly by the U.S. Department of Education.

The company announced in 2013 its plans to separate into two publicly traded companies[5] – an education loan management business to be launched with a new name – Navient – and a consumer banking business, which retained the name Sallie Mae.[6] The spin-off was completed on April 30, 2014.

In 2015, Navient attracted recognition from 2020 Women on Boards,[7] the Women's Forum of New York, and the New York Stock Exchange Governance Services for gender diversity on its board of directors[8]

The company acquired asset recovery and business process outsourcing firm, Gila LLC,[9] and health care payments firm Xtend Healthcare.[10]

Corporate and financial

Navient trades on the Nasdaq stock exchange under the ticker symbol NAVI.[11] Navient holds the largest portfolio of education loans insurance or guaranteed under the Federal Family Education Loan Program, as well as the largest portfolio of Private Education Loans.[12]

In 2014, Moody's downgraded Navient's senior unsecured debt and corporate family ratings to Ba3 because of its loss of the earnings, cash flows, equity and high leverage.[13]

Executive leadership

Jack Remondi is the CEO of Navient and has written[14] and spoken about recommendations to improve the student loan program.

Political influence

In 2016, Navient's PAC has donated $30,000 to the Republican National Committee and $20,000 to the Democratic National Committee. The PAC has also donated to the Congressional Black Caucus PAC and Team Ryan [15]

SLABS

Navient funds most of its operation by manufacturing student loan asset-backed securities:[16] bundling loans and selling them to investors as financial instruments.[17] The SLABS are graded by bond rating agencies such as Moody's Investor Services and Fitch Ratings.[18] The value of SLABS have been reduced as more students choose income-based repayment plans.[19]

As of June 2016, a majority of the SLAB tranches continue to be downgraded.[20]

Income-based repayment

Millions of college debt holders may be eligible for "income-based repayment" or "income-driven repayment".[21][22] According to the Washington Post, many students are not aware of these repayment programs.[23] When that debt gets forgiven, however, the IRS treats the forgiven principal as taxable income.[24]

Lawsuits, investigations, settlements, and controversies

In August 2015, the Consumer Financial Protection Bureau, which has been investigating the company for nearly two years, sent Navient a letter telling its executives that the agency's enforcement staff had found enough evidence to indicate the company violated consumer protection laws.[25]

On May 28, 2015, the United States Department of Justice announced that nearly 78,000 military service members would begin receiving $60 million in compensation for being charged excess interest on their student loans by Navient.[26]

On March 14, 2016, Senator Elizabeth Warren gave a speech in Congress qualifying Navient's service and subsequent contract award by the Department of Education as an outrageous fiasco.[27] Warren recommended "a total reform of student loan servicing to make sure that nothing as the Navient disaster ever happens again".[27]

In June 2016, stockholders filed a class action lawsuit against Navient. The plaintiffs included Chicago police officers and retired city employees in Providence, Rhode Island.[28]

On July 5, 2016, Guy Micciche filed a complaint against Navient in U.S. District Court alleging that the debt collector contacted the plaintiff, several times, on his cellular phone using an automated dialing system. In the complaints, the plaintiff alleged that he told Navient to stop calling him, but that the company persisted.[29]

Student loan resistance groups

Student Loan Justice is one group that has fought Navient by calling for bankruptcy laws to again include student loan debt.[30][31]

See also

References

  1. ↑ "The World's Biggest Public Companies". Forbes.
  2. ↑ Christel, Patricia Nash; Lavoie, Nikki (May 1, 2014). "Navient celebrates launch as new leader in loan servicing and asset recovery, dedicated to helping customers navigate the path to financial success" (Press release). Navient.
  3. ↑ "Lessons Learned From The Privatization of Sallie Mae" (PDF). U.S. Department of Treasury.
  4. ↑ Babyak, Stephanie; Glickman, Jane. "U.S. Department of Education Expands Its Student Loan Servicing Capacity". ed.gov. U.S. Department of Education. Retrieved 2009-06-17.
  5. ↑ Weise, Karen (2013-05-29). "Why Sallie Mae Is Splitting in Two". Bloomberg.
  6. ↑ "Sallie Mae Splits In Two, Names New Loan Servicing Unit 'Navient". Inside Higher Education. 2014-02-26.
  7. ↑ "Boardroom Gender Diversity Directory". 2020 Women on Boards.
  8. ↑ Goss, Scott (2015-06-23). "Navient earns award for diverse governing board.". The News Journal.
  9. ↑ "Navient Buys Gila, Boosts Asset Recovery Services - Analyst Blog Read more: http://www.nasdaq.com/article/navient-buys-gila-boosts-asset-recovery-services-analyst-blog-cm449697#ixzz4EWI6C6ML". Nasdaq.com. Zacks Equity Research. 03/01/2015. Check date values in: |date= (help); External link in |title= (help)
  10. ↑ Pallardy, Carrie (2015-10-22). "Navient acquires Xtend Healthcare, RelayHealth process $25B in ICD-10 claims & more – 4 RCM company key notes".
  11. ↑ "Navient Corporation Dividend Date & History". Nasdaq.com.
  12. ↑ "Form 10-K Navient Corporate 2015" (PDF). Navient.com. Navient.
  13. ↑ "Moody's concludes review of SLM Corp.". April 30, 2014. Retrieved July 13, 2016.
  14. ↑ Remondi, Jack (10/06/2015). "Smarter student loans: A game plan". Politico. Check date values in: |date= (help)
  15. ↑ https://www.opensecrets.org/pacs/pac2pac.php?cycle=2016&cmte=C00331835
  16. ↑ "SLABS: How to make money off someone else's private student loan". July 19, 2015. Retrieved July 13, 2016.
  17. ↑ "Stressed Out: Will Navient Cause the Student Debt Bubble to Pop?". Retrieved July 13, 2016.
  18. ↑ "Hedge Funds Smell Blood in the Student Debt Market". Retrieved July 13, 2016.
  19. ↑ "Moody's: Slowing FFELP repayment rates pose limited risk for Navient and Nelnet". August 19, 2015. Retrieved July 13, 2016.
  20. ↑ "Moody's announces rating actions on student loan ABS backed by FFELP student loans following the update of its rating methodology". June 14, 2016. Retrieved July 13, 2016.
  21. ↑ "Income-Driven Plans". March 8, 2016. Retrieved July 13, 2016.
  22. ↑ https://www.navient.com/loan-customers/payment-plans/plans-based-on-your-income/
  23. ↑ "There's a way to dramatically lower student debt payments, but hardly anyone uses it". Retrieved July 13, 2016.
  24. ↑ McArdle, Megan (February 27, 2013). "The Hidden Trap of Income Based Repayment". Retrieved July 13, 2016.
  25. ↑ "CFPB Considers Suing Student Loan Giant Navient For Cheating Borrowers". The Huffington Post.
  26. ↑ "Details of the Sallie Mae SCRA Settlement With the U.S. Department of Justice". May 14, 2015. Retrieved July 13, 2016.
  27. 1 2 Sen. Elizabeth Warren – Student Loan Servicing Fundamentals, 2016-03-14
  28. ↑ "Navient faces lawsuit after Clinton critique". Retrieved July 13, 2016.
  29. ↑ Torres, Louie. "Man claims debt collector violated law with calls". Retrieved July 13, 2016.
  30. ↑ Reilly, Peter J. "Interview With Student Loan Activist Alan Collinge On Bankruptcy Protection". Retrieved July 13, 2016.
  31. ↑ "That Student Loan, So Hard to Shake". The New York Times. August 24, 2008. Retrieved July 13, 2016.
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