The Obama administration sought to replace this labyrinthine system with a single entry point — a sea change in how student loan servicing would work. Instead of dealing directly with private vendors, all federal borrowers would gain access to their accounts through an Education Department portal, with standardized forms and processes. A single vendor would take the lead in creating the system’s interface
.. In October, the government narrowed the field to three finalists
- Navient; the Pennsylvania Higher Education Assistance Agency (better known as FedLoan);
- Great Lakes
.. The winner was to be announced in February.
.. Navient is the biggest lightning rod. In January, the Consumer Financial Protection Bureau and two state attorneys general sued Navient, charging it with a long list of misdeeds.
.. a particular piece of guidance from the Obama administration she struck down:
- that the Education Department should place great weight on a company’s track record when selecting student loan vendors, and should steer away from companies with histories of shoddy service or other problems.
.. that puts Navient — the nation’s largest federal student loan servicer ..
on stronger footing than it had been in bidding for agency contracts.
.. The Consumer Financial Protection Bureau responded ..
borrowers “should be able to repay their debt without having to deal with illegal loan servicing practices.”
.. Navient’s size makes it a very strong competitor — once past performance is played down.
.. The loan servicer has tremendous power to guide them through repayment options. Some plans stretch payment periods out for as long as 30 years, and others help qualifying students get a portion of their debt forgiven. Strategic use of those paths can trim — or inflate — the sum that a student ultimately pays by tens of thousands of dollars.