If you’re reading this, chances are you’re assigned to Navient to repay your student loans. This mega-loan-servicer manages at least $300 billion worth of student loan debt for around 12 million borrowers nationwide, after all. The company split from Sallie Mae in 2014; Navient got most of the federal student loans, and Sallie Mae got the private student loans.
Navient puts on a good show of being altruistic and forward-thinking. For example, in 2014, the company boasted that their cabinet was more than half made up of women (even though their current president is in fact, a man).
Things like this make you want to like the company, but they may be part of a bigger ploy — to hide some of the greed that’s at the company’s core. And if you’re assigned to Navient, you’ll have to navigate through all of that — but we can help.
We’ll pull the curtain back on Navient’s true operating structure, get insight from real people paying back their student loans through Navient, and provide tips on how to work with them so you can find the best way to pay off your Navient student loans for good.
If you thought Harvey Weinstein had a lot of lawsuits filed against him, wait until you hear about the Navient lawsuits. This company is currently being sued by the federal government (via the Consumer Financial Protection Board) and the state governments of California, Illinois, Pennsylvania, and Washington.
Charges against the company read like a laundry list of things you’re probably familiar with if you’ve spent much time with Navient:
- Applying payments incorrectly
- Steering people into forbearance (with accruing interest) when an income-driven plan would have been better
- Failing to notify borrowers of paperwork they needed to file
- Hurting the credit of disabled borrowers, including injured veterans
- Giving out incorrect information on co-signer release to private student loan borrowers
How Navient Got So Bad
There are a few reasons why Navient is in such hot legal water. To understand why you have to understand Navient’s business model: the company bids for contracts from the federal government in order to service federal student loans (that’s how they get paid). The contracts only go to companies that a) are the cheapest, and b) have the lowest percentage of borrowers who default.
To get to the first point (cheap costs), Navient pays its loan servicing specialists a scant $12/hour, according to Glassdoor. That’s even less than their college interns, at $18/hour. So, you can understand there’s not exactly a whole lot of incentive there to go the extra mile to help you.
To get to the second point, Navient often pushes people into forbearance. This might reduce your likelihood of default if you’re not making payments anymore. In fact, the company weirdly boasts that “our federal loan customers default at a rate 31 percent better than the national average.”
But in the long term, it’s a bad strategy because interest will just keep piling up and making your loan even bigger. You trade short-term gain for long-term pain and financial calamity when instead a simple income-driven plan might have been better for you all along.
Navient Student Loan Trusts
You’ve heard of mortgage-backed securities that led to the 2008 financial crisis, right? When you take out a mortgage, that bank might sell your mortgage to another bank, who bundles them all up and offers them to investors, who then get the proceeds from your mortgage through a labyrinth-like accounting scheme.
That same scheme is running for student loans (especially private student loans and FFEL loans). In this case, they’re called “student loan trusts,” and Navient currently owns or services several of them.
Navient currently has a whole host of separate student loan trusts for private student loans made by Chase Bank, Earnest, Collegiate Funding Services, and the Student Loan Corporation. They even hold some federally-backed student loans (FFEL loans) made before July 2010 in its own student loan trust.
All of this trading around of student loans in student loan trusts makes it hard to track down individual borrowers. Some trusts held with other companies, such as the National Collegiate Student Loan Trusts, are currently being sued by the CFPB on the grounds that they can’t actually prove who owns what loans anymore.
We did a survey in summer 2018 to get people’s thoughts on their federal student loan servicers. Out of a total of 386 respondents, 61 people were currently working with Navient on repaying their student loans.
Unsurprisingly, Navient was rated the worst student loan servicer of all: people gave it just 2.7 out of 5 stars. Navient received even lower marks than the notorious FedLoan (which got 2.8 out of 5 stars, by the way).
92% of people have had to contact Navient at some point during their ongoing student loan repayment journey. Of those people, only 30% had their issues resolved satisfactorily. That means that 70% of borrowers either did not or only partially, had their issues resolved properly! That means there’s less than a coin flip’s chance of having your problems solved when you contact Navient.
Here are the most common things borrowers assigned to Navient had to say:
Like we mentioned above, one of the strategies that Navient uses to keep its borrower default rate down is by pushing people towards forbearance. This allows you to take a temporary break from making payments, but interest will keep piling up in the meantime.
“I find them to be very deceiving,” says Shannon M., who is repaying her student loans through Navient. “I am very thorough with my student loans and am relentless when calling, but I have many friends who have given up because Navient is so hard to deal with. When you qualify for a $0 monthly payment based on your income, or when you go into forbearance, they make it sound like a gift.”
“They purposefully do not mention that although you are not paying, your interest is racking up. Although that would be common sense to some people, it is not to others, and I find a lot of post-grads want to bury their heads in the sand so they just hear ‘I don’t have to pay’ and end it there, not realizing how much more it will cost in the long run.”
Another thing we heard from several people is that student loan reps (while underpaid) are often still at least friendly people to deal with. It’s unlikely that you’ll find yourself on the phone with some cranky-pants operator who is constantly having a bad day.
Here’s what people had to say:
“They were friendly and helpful when I had to call about deferring my loans during my internship.” — anonymous
“All my interactions with Navient so far have been very positive. Most of the time the rep was very knowledgeable and if they didn’t know the answer to my question they would find an answer before the call was finished.” — Matt C.
“I’ve honestly only had good experiences with them. They have always been able to answer my questions and resolve my issues quickly and efficiently. I will say they don’t usually volunteer information, I need to know what I’m asking for. But I’ve honestly had more trouble with people claiming to be able to advise me on my loans who didn’t actually know what they were doing (one was even arrested….).” — Ethan H.
In 2016, the average college student graduated with an average of between $20,000 and $36,350 in student loans, depending on which state you came from. So, it’s understandable why most advice for student loan borrowers is geared towards people with this amount of debt.
But, one of the things we’ve noticed in surveying borrowers working with student loan servicers is that it’s the unusual cases that fall through the cracks. If you take time off for an internship, for example, or are trying to start paying back your loans before payments are due, loan representatives might not give you 100% correct information.
And high-balance student loan borrowers, which are far outside the norms of what most student loan reps deal with, are no exception.
“Most have knowledge about the subject, however, some are more familiar with undergraduate student loans not exceeding >$50k so they lack giving appropriate input on a half million dollars loans.” — anonymous
Or, how about this story from Sarah C.:
“My debt is quite high and the minute details of the various repayment plans often confuse the representatives. I have had to explain plans to the representatives, and even supervisors before!”
“Looking back, one of my more unfortunate encounters with Navient occurred a few years ago when a representative put me into forbearance for a month so that some required forms could process. Ever hear of capitalization on six figures of student loan debt? I didn’t truly understand the consequences of it at the time and I certainly don’t want to add up just how much missing an important email to fill out a form will cost me in the long term.”
“I wish the representative had deeply understood just how much capitalization impacts a high debt borrower like myself so that we may have more thoroughly discussed any alternatives I might have had at the time.”
1. Can Navient take my house?
If you don’t make a student loan payment for a few months and allow your loans to go into default, the government can sue you. That’s because the government actually owns your loans; not Navient. The government can even place a lien on your home, which means you can’t sell the home, refinance your mortgage, or get a home-equity line of credit until you pay off the loan. Technically, the government can force you to sell your home to pay the debt, but this is very rare.
2. Can Navient garnish wages?
Navient itself isn’t able to garnish wages. But the federal government can, to the tune of 15% of your disposable income. If that happens, they’ll send you a notice at least 30 days before they start garnishing your wages, and only if it’s been at least three to six months since your loan went into default. You can request a hearing within 30 days after you receive this letter and argue that either the loan isn’t valid, or that garnishing your wages will cause unnecessary hardship.
3. Are Navient loans eligible for forgiveness?
If you have federal student loans, they are eligible for student loan forgiveness through the Public Service Loan Forgiveness program or one of the income-driven loan repayment programs. However, forgiveness isn’t automatic; you’ll need to meet each program’s requirements.
4. Can Navient garnish my social security?
Navient can’t garnish your social security benefits directly, but the federal government can. Most students will have their student loans paid off by the time they receive social security benefits, but if you’re an older adult and have taken out parent PLUS loans, this might be a concern for you.
5. Can Navient loans be consolidated?
Yes. You can consolidate your federal student loans (including those that Navient services) into one loan that’s easier to repay.
6. Can Navient raise interest rates?
If you have private loans that are serviced by Navient, then yes — they can raise the interest rates on your private student loans, if they are adjustable-rate loans. Otherwise, all federal student loans — including those serviced by Navient — are fixed-rate, and won’t change.
7. Can Navient loans be refinanced?
Yes. You can refinance your federal student loans serviced by Navient with a private student loan company. Make sure you think about it long and hard before you do though because you’re essentially switching out federal student loans for private student loans. Private student loans come with a lot fewer protections, like PSLF, income-driven repayment plans, and even forbearance in some cases.
8. When does Navient capitalize interest?
If you go for any period of time without making payments on your student loans after you graduate, that interest will be added up and capitalized (i.e., added to your total student loan balance). This includes periods when you’re in forbearance, or if you miss your certification on an income-driven repayment plan. You will also capitalize your interest if you change repayment plans. Make sure your interest accrues and grows at a simple rate rather than an exponential one with capitalization.
9. What does the Navient lawsuit means for borrowers?
The Navient lawsuits — all half-dozen or so of them — are still currently in court, so it’s unclear what’ll happen as a result of the success or failure of the lawsuits. If they’re successful, it could mean that Navient must whip itself into shape and provide better service through some measurable value. But whether or not a success will translate into dollars back in your pocket isn’t exactly clear right now.
Unfortunately, the student loan ombudsman recently quit his post in protest, which means any federal settlement with Navient will likely not have a huge impact.
Unfortunately, there aren’t a whole lot of good options when it comes to ditching Navient, if you’re tired of working with them. Still, there are a few things you can do.
Contact Navient’s Complaint Department
There’s no guarantee that this will actually solve any specific problems you’re having, but it also can’t hurt either.
A few tips for contacting any customer complaint department, including Navient’s:
- Be respectful. No one wants to help out angry people writing in ALL CAPS
- Detail the problem carefully, including where Navient went wrong
- Be succinct and clear; if they have to read a James Joyce novel, it’ll be harder to help you
Here are the contact details for Navient’s complaint department:
Office of the Customer Advocate
- O. Box 4200
Wilkes-Barre, PA 18773-4200
Refinance Your Navient Student Loans
If you refinance your student loans with a private student loan company, then voila! Problem solved. You’ll even get a cash back bonus for doing so through Student Loan Planner.
Refinancing isn’t a big deal if you already have private student loans to start with. But if you’re thinking of refinancing your federal student loans, you need to give this a lot of thought first. That’s because you’ll lose out on certain protections (like the ability to enroll in an income-driven repayment plan) if you trade in your federal student loans for private student loans.
If you won’t need these things and/or you expect to pay off your Navient student loans within a short amount of time anyway, then this probably doesn’t matter much. But still, it’s something you need to know before you apply for refinancing.
Consolidate Your Federal Student Loans Away from Navient
If you have not yet made payments on your federal student loans, then there is likely no downside to consolidating all of the loans together into a Federal Direct Consolidation Loan.
The interest rate remains the same (weighted average of what you currently have rounded up to the nearest one-eighth of one percent). You’ll have an easier time keeping track of your debt too since you might only have a couple loans after a consolidation instead of a dozen or more.
If you have already built up credit towards loan forgiveness, then consolidating creates a new loan and wipes away this credit. That is why you want to consolidate before you make a bunch of income-driven payments, such as right after graduation.
Here’s the trick on moving your loans away from Navient this way. When you consolidate, you can do it yourself on studentloans.gov or you can call the Student Loan Support Center at the Dept of Education at 1-800-557-7394 for human guidance.
You will be able to select the loan servicer where you want your consolidation loan to go, and that gives you power. Instead of working with Navient (2.7 stars out of 5), you can choose a servicer like Great Lakes Student Loan Servicing. Our readers rated Great Lakes as the top federal student loan servicer at 3.8 stars out of 5.
If you’re married, you want to have both of your loans serviced at the same place if possible, so take that into account before sending your loans somewhere besides Navient. Also, if you plan to qualify for the PSLF program, you might as well transfer your loans to FedLoan Servicing since they are the only servicer that will monitor your credit towards the program.
Pay Off Your Student Loans as Fast as Possible
If you pay off your student loans, you’ll be done with both Navient and student loans, period.
Of course, this is easier said than done. But take a look at your budget and see whether you can cut some of your expenses and/or earn more money with a side hustle. Any extra money you can throw at your debt will help you get rid of it even faster.
You can even use free debt calculators like Undebt.it to calculate how much sooner you can get out of debt by making extra payments each month.
Hire Us For a Student Loan Consult
Navient’s only job is to minimize your likelihood of defaulting, for the cheapest rate possible. Honestly, they’re not even that great at that. At the end of 2017, over 17% of recently-graduated borrowers with regular federal Direct loans were currently behind on their payments while working with Navient.
But as you probably know by now, just avoiding default isn’t a good metric of financial success.
You wouldn’t trust a $12 an hour phone rep for advice on anything else in your life, so why should you trust Navient for advice on what to do with your student loans?
If you want help navigating through the myriad of financial programs available to find the best one for you, and the best one that’ll help you ditch Navient as fast as possible, you can always contact Travis and the team for a student loan consult.
What has your experience been in working with Navient? Do you have any good or bad experiences to share? We’d like to hear your comments below.