November 22, 2021

As Student Loan Servicer Maximus Assumes Navient’s Portfolio, Warren Questions Company’s Troubled History and Seeks Assurances that Borrowers Will Receive Protections and Services During Transition

Text of Letter (PDF)

Washington, D.C. - United States Senator Elizabeth Warren (D-Mass.), along with Senators Sherrod Brown (D-Ohio), Richard Blumenthal (D-Conn.), Tina Smith (D-Minn.), and Chris Van Hollen (D-Md.) sent a letter to Maximus, the student loan servicing company that is assuming Navient’s federal contract with the Department of Education (ED), questioning the company’s troubling history and seeking assurances that borrowers will receive appropriate services and protections during the transition.

“Supporting our nation’s student borrowers as they manage significant and often debilitating debt is one of the most pressing issues facing ED and its contractors. As a servicer with a now expanded caseload of loans, it is important for Maximus to also do its part in this effort,” wrote the senators. 

Earlier this year, Navient announced they are transferring their federal loan servicing contract to Maximus, and on October 20, 2021, ED approved the transfer. Maximus will take on the responsibility of servicing 5.6 million additional student loan accounts and managing a total of $449 billion of debt. Maximus already services loans that are in default. The new agreement will bring the total number of borrowers serviced by Maximus to nearly 13 million, despite the company’s substandard history as ED contractor for management of student loan accounts for borrowers in default. 

In 2015, an audit conducted by ED’s Office of the Inspector General revealed that Maximus had failed to address deficiencies and needed modifications to the defaulted loan servicing platform that it manages, resulting in ED paying inaccurate commissions and bonuses to Private Collections Agencies. In 2019, a federal judge found ED in contempt of court and fined it $100,000 for defying a court order to stop collection from protected borrowers who were defrauded by a for-profit college. This resulted in thousands of borrowers who were eligible for borrower defense to repayment, the primary mechanism for relief for student loan borrowers who are defrauded by their school, having their loan entered into default, and their tax refunds inappropriately seized or their wages garnished. Maximus has also taken the position in court that it has immunity because of its status as a government contractor.

In the letter, Senator Warren and her colleagues also raise concerns about the potential conflict of interest presented by Maximus’ continued role as the servicer for all student loans currently in default, and its new role as a servicer for 5.6 million borrowers. Maximus has an opportunity to profit on loans in default through its existing contract to manage defaulted loans.

To better understand the company's plans to ensure a smooth transition for new loans it will be servicing, Senator Warren and her colleagues ask Maximus about their plans for staffing, employee training, avoiding errors during the transition, communications with borrowers about restarting repayment, informing borrowers about the Public Service Loan Forgiveness program, and safeguarding against conflicts of interest.

Earlier this month, Senator Warren alongside Senators Edward J. Markey (D-Mass.), Chris Van Hollen (D-Md.), Richard Blumenthal (D-Conn.), Sherrod Brown (D-Ohio), Robert Menendez (D- NJ.), and Tina Smith (D-Minn.) sent letters to the heads of Pennsylvania Higher Education Assistance Agency (PHEAA), Granite State Management & Resources (Granite State), and the Navient Corporation (Navient) calling on them to correct past errors with borrowers’ accounts and address growing concerns over their preparedness to transfer millions of borrowers to new servicers.