How Borrowers Should Handle the Navient Shutdown

In September 2021, Navient announced it was quitting the federal student loan servicing business. The Department of Education approved the loan servicer's request. All of Navient's six million borrower accounts are in the process of being transferred over to Maximus Federal Services (through its subsidiary, Aidvantage), another federal student loan servicer.

The change might be good news for student loan borrowers since Navient ranked lowest on our survey of the best and worst federal loan servicers.

Whether you're assigned a servicer or you choose one by consolidating your loans, there’s always a risk for mishaps when switching servicers, but there are ways to avoid unnecessary stress before and after the Navient shutdown.

Events leading up to the Navient shutdown

Although Navient's exit as a federal student loan servicer seemed abrupt, it wasn't necessarily a surprise.

Navient has been the target of lawsuits from several state attorney generals, with the most recent being a 2022 announcement that the servicer agreed to a $1.85 billion settlement for predatory lending practices. This is expected to give student loan relief to as many as 66,000 borrowers.

The Consumer Financial Protection Bureau (CFPB) also sued Navient in 2017 for allegedly processing student loan payments incorrectly. At one point last year, Sen. Elizabeth Warren requested that the federal government fire Navient.

On June 24, 2020, the education department announced it had signed contracts with five companies to service federal student loans going forward. Navient was not one of the companies chosen.

Considering that federal student loan servicing represents a small portion of Navient’s revenue, yet drew the most complaints and legal actions, it makes sense for Navient to make an exit.

Unlike Fedloan Servicing, another servicer that is being dropped by the federal government, Navient decided to be proactive. Navient preemptively issued a statement that it would transfer its federal loan servicing to Maximus, another federal loan servicer, through its subsidiary, Aidvantage. The agreement was pending government approval, which has since been granted.

The company will still exist as a business and continue its other services outside of federal student loans. Navient and its subsidiaries will continue to service private student loans, consumer loans and provide business processing solutions to various industries.

4 Next steps to take before Navient quits

While a loan servicer quitting the federal loan system isn't necessarily common, it’s common for student loan borrowers to switch servicers. If Navient was your loan servicer, follow the steps below to get ahead of the Navient shutdown for federal loans.

1. Download your NSLDS file

The National Student Loan Data System (NSLDS) is a database used by the U.S. Department of Education to keep a centralized record of all federal student aid. The NSLDS contains all of your loan information in one spot, including FFEL, commercially owned FFEL, and Direct Loans.

Navient will this information to your new servicer, but it’s wise to download your NSLDS file as a precaution. You can access your file online through the Federal Student Aid website. You'll be asked to enter your FSA ID and password. Once logged in, you'll have the option to download your file.

2. Take screenshots of your loan details

At some point, Navient will shut down its borrower portal, which means you won't be able to access your loan information through its website. Before that happens, take screenshots of any loan and personal information connected to your Navient account.

3. Create a folder for your student loan history

Keep your downloaded NLDS file and Navient screenshots organized. Create a folder, either in your Google Drive, Dropbox, or another cloud-based storage system, to store all of the information you've gathered.

Having a specific folder will keep the information safe and accessible if you ever need to reference it.

4. Forward issues to the CFPB

If you have any existing issues with Navient in relation to student loan payments or credits toward Public Service Loan Forgiveness (PSLF), file a complaint with the CFPB. As Navient transitions out of the federal student loan business, it will get harder to receive support. Most likely, it’ll direct you to your new servicer instead of fixing the issue itself.

Steps to take after Navient quits

At some point, Navient will completely transition out of federal loan servicing. At that time, you'll need to take additional steps to ensure your loans are being handled properly by your new servicer.

Verify that you’re communicating with your legitimate new servicer

You should receive correspondence from your new servicer during the transition period. Because millions of student loan borrowers are going through the same situation, watch out for scammers pretending to be your new servicer.

See who your new servicer is by logging into your Federal Student Aid account. Once logged in, scroll down to the “My Loan Servicers” section to see your new loan servicer's information. You can also find out by calling the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.

Confirm that your student loan details are accurate

Once you've connected with your new servicer and set up an online loan account, log in and verify that your information is correct. Details to confirm include your:

• Loan programs
• Loan balances
• Repayment program
• Monthly payment history
• Recertification details
• Personal and contact information

If your loan was in forbearance or deferment, verify that your loan details transitioned over properly. Reach out to your new servicer immediately if there’s a discrepancy.

Monitor payments after the transition

Continue to monitor your monthly payments after transitioning to a new loan servicer. You can do this through your online loan account. Verify your payment due date and amount are accurate.

You should be able to access payment history or set up notifications when a payment is made. Alternatively, you can also follow your monthly payments through your bank account online.

Navient shut down: time is ticking

Paying off student loan debt is a big deal. Be diligent any time there is a change or interruption in loan servicing that affects your student loan repayment. Staying on top of your loans is the best way to ensure that the transition goes smoothly. Address any issues immediately to protect yourself and keep yourself on track regardless of your repayment plan.