Navient Corp. has lost the Department of Education's debt collection contract that would give awardees about $417.1 million in revenue.
The department awarded contracts to seven companies out of the 48 proposals it received in response to the solicitation, according to the department's letter sent via email to companies that participated in the solicitation. The selected companies are Financial Management Systems Investment Corp., GC Services Ltd. Partnership, Premiere Credit of North America LLC, The CBE Group Inc., Transworld Systems Inc., Value Recovery Holding LLC and Windham Professionals Inc.
Navient was hoping to win the award, which could last as long as 10 years, as the company has collected on defaulted student debt for the department since 1997, Bloomberg News reported. The company was expected to benefit under the incoming Trump administration, which could retrench from the student loan business and give it to private lenders, according to the report.
Navient could lose another contract as one of the current contractors that collect on federal student loans that have not defaulted, as the Department of Education is considering changes to the way it collects on such loans and intends to award a new contract by February, the news outlet reported.
Navient has been a subject of controversy over the past few years as the Consumer Financial Protection Bureau has been investigating the company's debt collection subsidiary Pioneer Credit Recovery over alleged mistreatment of borrowers. The Department of Education in March 2015 declined to extend Pioneer's expiring debt-collection contract, saying the company's employees misled borrowers. Navient sued the department to overturn the decision. The case is pending.