Sallie Mae has grown to become by far the biggest name in student lending. Along the way, Sallie Mae has generated its fair share of negative press. In 2014 alone, we have seen a scathing report from the National Consumer Law Center, and we have also seen Illinois launch a multistate probe into Sallie Mae’s lending practices. Today Sallie Mae explained some major changes coming to their company.
Who is Navient?
Navient is a new company created by Sallie Mae as part of their previously announced corporate restructuring. The term Navient was coined by Sallie Mae, and they will be using that name for their new company in charge of Federal loan management, servicing, and asset recovery. Sallie Mae will continue to exist, but as a consumer banking company. Based on the press release, it looks like Sallie Mae will still be originating private student loans, but that Navient will be the company that handles the federal loans. This change in name and structure is expected to take place in the second half of 2014.
What does this mean for borrowers?
The biggest change will be the name on the envelope when your student loan bills come each month. If you get a letter from Navient, just remember that it is Sallie Mae. In theory, there should not be any changes to the loan interest rates, repayment, or terms. In practice, only time will tell.
If you currently have loans with Sallie Mae, be sure to keep an eye on the Navient changeover. This will especially matter for things like auto bill-pay with your bank and any other automated process involving Sallie Mae. When the time comes, it will be critical to change everything into the Navient name.
How will this restructuring work?
If you already have private loans from Sallie Mae and government loans serviced by Sallie Mae, then you may have already noticed some of the changes. Customer Service Representatives can now only help you with private loans or with government loans, not both. As it works right now, their system can be somewhat confusing and result in a lot of transfers. Hopefully the full separation will make it more clear who to talk to about most loans.
People who will be affected by the change can probably expect a letter in the mail from Sallie Mae/Navient explaining the details as it pertains to their individual loan. If you have any questions or confusion regarding the change, it is likely in your best interest to reach out to Sallie Mae and discuss you options and what you need to do.
Once again big changes are coming in the world of student loans, and borrowers have no say. Today Navient is both a word and a company that nobody has heard of. By the end of 2014, Navient will be servicing over $300 billion dollars in student loans for over 12 million people.