Students and alumni who hold federal student loans previously serviced by Sallie Mae recently received a message informing them that Sallie Mae has become two distinct student loan companies: Sallie Mae and Navient.
Federal student loans are being transferred to Navient, while most private loans will remain with Sallie Mae.
“Sallie Mae is now focused as a ‘save, plan, and pay for college’ company. But we’ll make private education loans,” said Rick Castellano, a spokesperson for Sallie Mae.
“Navient is a loan servicing and management company,” said Nikki Lavoie, corporate communications director for Navient, in an email.
“Specifically, Navient provides customer service for student loan borrowers on behalf of the U.S. Department of Education and on federal and private education loans in its portfolio,” Lavoie added.
Sallie Mae and Navient’s announcement, which was emailed to all impacted borrowers, stated: “We did this in order to maximize our focus, expertise and serve you better. It’s an exciting time here at Navient as we embark on this new journey with you in mind.”
“We announced the separation on April 20 of 2014. On Oct. 13, the separation is officially complete,” Castellano said. “That’s why I know a number of customers have been receiving communication about the change and what that means.”
Borrowers will keep their same login accounts, electronic payments will transfer to Navient, and the addresses and phone numbers will remain the same during the transition.
“The only changes [Sallie Mae] customers will have is a new loan number, and that will require them to make a change in their account and update their payment information with their new loan number,” Castellano said.
“If they’re in repayment, they can continue to send payments to the same address they have always used,” Lavoie said. “They just need to change the payee name to ‘Navient’.”
Heather Mattoli, assistant director of Financial Aid at Portland State, explained that many students don’t understand federal loans are processed by private third-party servicers who handle the billing and collection of loans.
“There’s this assumption that it’s the Department of Education [servicing loans],” Mattoli said.
While Sallie Mae was formerly a federally sponsored entity, it’s now a publicly traded corporation that has been fully privatized since 2004.
“For Sallie Mae, it’s a new day for us where, in the end, we are squarely focused on providing responsible private education loans, savings products and even insurance options,” Castellano said.
Sallie Mae and Navient both emphasized their strong track record of keeping student loan borrowers from defaulting.
“At Sallie Mae we recommend people take a 1, 2, 3 approach: scholarships and grants, student loans, [federal] loans, then private loans,” Castellano said. “If there’s a gap in financing, that’s where private education loans come in.”
“Americans with federal loans serviced by Navient are less likely to default, less likely to postpone payments through forbearance, and more likely to use income-based repayment plans,” Navient stated in a press release about the transition.
Mattoli said that when dealing with loans, it’s important for students to regard information provided by their servicers with a healthy skepticism and to keep track of all documentation regarding their payments.
Mattoli also explained that if borrowers are having issues with one servicer in particular, they have an opportunity to change their servicer after they consolidate their loans.
“We’ve been communicating with students about the split. If they do have questions we encourage them to reach out to us,” Castellano said. “If a student is unclear on whether they are a Sallie Mae or a Navient customer, they should contact us.”
“Starting in November, many recent graduates will start repaying the money they borrowed for college,” Lavoie said. “That’s because the six-month grace period on their student loans will end.”
For many borrowers, the standard repayment programs are not always the best option, Mattoli said. She encouraged all students to look into income-based repayment plans and loan forgiveness programs for people working in government or non-profit jobs.
“Any and all alumni should come in if they have questions about their loans, particularly to look at any repayment or penalty fees or interest rates that look suspect. I don’t care if they graduated 25 years ago,” Mattoli said.
Mattoli also extended this invitation to faculty and staff, who often don’t realize that the Financial Aid office can advise them about their loan repayment.
Additional reporting by Colleen Leary.