Bucking pressure to terminate its contract with student loan servicer Navient Corp., which is under fire for allegedly gouging some borrowers, the Department of Education has instead renewed the agreement. While the Delaware-based firm neither admitted nor denied that it overcharged service members and imposed excessive fees on other borrowers, it did agree in May to a $97 million settlement with federal authorities.
Despite the calls to cancel Navient's contract with the government, the Education Department decided that the disruption to borrowers would be an "irresponsible" move. "If we determine it is appropriate to end a contract with a servicer, we would need a transition period to smoothly transfer loans to another company," an official said. Spun off from Sallie Mae earlier this year, Navient is the third-largest of 11 companies that collect payments on government student loans. Its portfolio currently includes payments on $166 billion worth of loans to about 6 million student borrowers.