They are a servicer, not a lender -- they are contracted by the lender to collect the money from the borrower. So the borrowers never asked to be customers of Navient. They borrowed some money from a bank or the government, who then contracted Navient to service the loans.
Now servicing loans is like owning an interest only bond -- you get a small payment every month as long as the loan is paying. When you own servicing rights, what you want to do is for payments to drag on for as long as possible -- since you don't get the principal, having the loan pay early is the second worst thing that can happen.
Now its very possible that Navient is doing things which are not in the interest of either the borrower or the lender, but are in the interest of Navient. And it's likely perfectly legal.
But again many of these loans are not just simple transactions in the marketplace, but rather subsidized social programs, where the government in promoting the program has a reasonable expectation that some part of this subsidy should fall to the borrower, and is reasonable frustrated when a provider whom they have hired tries to prevent this.
> But again many of these loans are not just simple transactions in the marketplace, but rather subsidized social programs, where the government in promoting the program has a reasonable expectation that some part of this subsidy should fall to the borrower, and is reasonable frustrated when a provider whom they have hired tries to prevent this.
IF SO, that seems like a damning indictment of the government and the contracts they have drawn up then?
If you're trying to run some sort of soft touch social program where maximising the amount collected isn't your primary goal, then obvious the ONE thing you shouldn't do is then outsource managing it to a private company who gets paid based on their ability to maximise the account collected. Right? Given that's the one thing the government could do most likely to undermine their goals?
If you want happy borrowers, sign a contract with Navicent that pays them based on their NPS score. :)
Maybe we shouldn't be mad at Navient then? Seems like the government is the root cause of the entire student loan mess. Basically unlimited amounts of unsecured debt for people that don't understand the implications and are not required to get a degree that has a ROI to pay it back in a reasonable amount of time. Setting people up for a lifetime of wage slavery...
They are a servicer, not a lender -- they are contracted by the lender to collect the money from the borrower. So the borrowers never asked to be customers of Navient. They borrowed some money from a bank or the government, who then contracted Navient to service the loans.
Now servicing loans is like owning an interest only bond -- you get a small payment every month as long as the loan is paying. When you own servicing rights, what you want to do is for payments to drag on for as long as possible -- since you don't get the principal, having the loan pay early is the second worst thing that can happen.
Now its very possible that Navient is doing things which are not in the interest of either the borrower or the lender, but are in the interest of Navient. And it's likely perfectly legal.
But again many of these loans are not just simple transactions in the marketplace, but rather subsidized social programs, where the government in promoting the program has a reasonable expectation that some part of this subsidy should fall to the borrower, and is reasonable frustrated when a provider whom they have hired tries to prevent this.