Maximus Federal Services Inc. and Aidvantage Student Loan Servicing Review

What you need to know:

• Maximus Federal Services Inc. will take over servicing of Navient's federal student loans this winter under the name “Aidvantage.”
• The company was previously awarded a contract by the federal government in 2013 to handle defaulted federal student loans.
• Maximus Federal Services Inc. will likely continue as the primary servicer for defaulted federal student loans, along with F.H. Cann & Associates.

On October 20, 2021, Navient and the U.S. Department of Education announced that Maximus Federal Services will now service federal student loans that are currently being serviced by Navient. The Navient announcement indicates the change will happen this winter and borrowers with Navient as their servicer will receive a welcome letter with more details.

Previously, on June 24, 2020, the U.S. Department of Education was revamping its student loan servicing options. The ED awarded contracts to five student loan servicers and ended relationships with several longtime servicers, including Great Lakes and Nelnet. However, the ED announced in August that it also was extending current loan servicing options through December 2021 or March 2022, depending on the servicer.

Maximus Federal Services Inc. was already the official loan servicer for defaulted loans over 360 days delinquent. It received another contract to continue those services going forward.

Here’s a closer look at Maximus Federal Services Inc. and what you need to know in case your loans are transferred to the company.

What is Maximum Federal Services Inc.?

Maximus Federal Services Inc. is a private, for-profit company founded in 1975. It’s known for its partnerships with federal, state and local governments on health and human services programs. In 1987, Maximus landed the country’s first privatized welfare contract in Los Angeles.

One of Maximus' primary roles is managing the Default Management Collections System, the platform used to service defaulted student loans. It also operates call centers for the Department of Education’s Default Resolution Group.

As a federal student loan servicer, Maximus Federal Services Inc.:

• Handles all correspondence with its borrowers
• Operates call centers and intake facilities
• Manages and stores any documentation related to its borrowers
• Assists borrowers with account changes
• Processes loan payments
• Provides technical and educational support

The current value of Maximus’ contract with the Department of Education is over $194 million.

Maximus Federal Services Inc. customer feedback

There isn’t much information available on borrowers’ opinions of Maximus Federal Services as a student loan servicer. Maximus Federal Services has a B+ rating with the Better Business Bureau. All of the posted customer complaints, however, are related to other programs managed by Maximus.

One reason there may not be much information about Maximus is that most borrowers have never heard its name before. A civil lawsuit was filed in February 2020 against the student loan servicer alleging illegal collections practices against borrowers who had submitted claims for federal student loan forgiveness based on borrower defense.

One of the claims to come out of this lawsuit is that Maximus doesn’t always identify itself as a loan servicer, leaving borrowers to believe any correspondence is from the Department of Education itself, according to the Student Borrower Protection Center. The lawsuit against Maximus is still ongoing.

Maximus Federal Services Inc. might still handle defaulted student loans

Maximus Federal Services Inc. was already awarded previous contracts to service defaulted loans. It makes sense that its role as primary servicer for these loans would continue with the latest contract.

Student Loan Planner® founder Travis Hornsby commented, “My question would be why loans get transferred when they go into default? Wouldn't it be less confusing to already-confused borrowers if they got contacted by the same group their loans were already at?”

As of the third quarter of 2019, the national student loan debt was at $1.5 trillion, with 11% of aggregate student loan debt 90 or more days delinquent or in default.

Hornsby also wonders how well Maximus is actually doing in servicing defaulted loans. “Defaults are so high, despite IDR plans, which really means defaults should be rare since low-income people should always be able to pay $0,” said Hornsby. “That means Maximus Federal Services probably isn’t doing a great job.”

However, many borrowers defaulted on their loans before Maximus was their loan servicer, so not all of the blame is on the company.

What to do if Maximus Federal Services Inc. is your new servicer

If Maximus Federal Services Inc. (which also operates as Aidvantage). becomes your new loan servicer, your student loans are in default. Direct loans and FFEL loans are considered in default if you don’t make scheduled payments for at least 270 days.

If your loan is in default, the best course of action is to contact Maximus as soon as possible to discuss your loans and repayment options. Defaulting on a loan can lead to severe consequences like:

• Your unpaid loan balance becomes immediately due.
• You lose eligibility for other federal student aid.
• Your credit score and credit rating can drop.
• You can’t sell or buy assets, such as real estate.
• Tax refunds and federal benefits can be withheld and applied toward your loans.
• Your wages can be garnished.
• You can be sued.
• Your school may withhold your transcript.

It’s imperative to touch base with Maximus right away so you can work with them to get your loans out of default as quickly as possible.

How to contact Maximus Federal Services Inc. about your student loans

If your loans are in default, you can contact Maximus Federal Services via the Default Resolution Group.

Phone, 8 a.m. to 8 p.m. EST:

800-621-3115
800-825-9923 (hearing impaired)

Regular Correspondence Address:

U.S. Department of Education
P.O. Box 5609
Greenville, TX 75403-5609

Payment Address:

U.S. Department of Education
National Payment Center
P.O. Box 790336
St. Louis, MO 63179-0336

Borrowers can find more contact information, including an email inquiry form, on the Default Resolution Group website.

Maximus Federal Services Inc. FAQs

Is Maximus Federal Services a federal agency?

No, Maximus Federal Services is a for-profit company contracted by the Department of Education to service federal defaulted student loans.

Can Maximus Federal Services garnish my wages?

There is a chance that your wages could be garnished if your student loans are in default. These collection methods are often a last resort used by the ED.

How do I get my loans out of default with Maximus Federal Services?

The most common methods to get your student loans out of default are through loan rehabilitation or loan consolidation. Another option is to repay your loan balance in full, although it's unlikely borrowers with loans in default have the financial means to choose this method. The sooner you reach out to Maximus about your defaulted loans, the sooner you can work with them on a repayment plan that works for both parties.

Moving forward with Maximus Federal Services Inc. student loans

You don’t have a say in who services your federal student loans. Loan servicers are assigned to borrowers. And if you’ve defaulted on your loans, there’s a good chance that Maximus is handling your loans now.

Your first step is to get your loans out of default. Work with Maximus to determine a good repayment plan and do your best to get back in good standing.

Once you’ve done this, you can choose another path for your repayment, such as student loan refinancing. Keep in mind, though, that you’ll lose access to federal protections like Income-Driven Repayment (IDR) plans and loan forgiveness when you refinance.

If you’re stuck and don’t know what to do with your student loan debt, our consultants help you create a customized repayment plan based on your specific situation. We’ve consulted with more than 4,000 borrowers on over $1.05 billion in student loan debt. Contact us today to book a consultation with one of our experienced student loan experts.