Navient gets schooled by investors
Shares of Navient have plunged since an Associated
Press investigation appeared to confirm allegations
that the student loan servicer illegally steered
borrowers into higher cost repayment plans.
States including Illinois, California and Washington
are suing Wilmington, Delaware-based Navient,
accusing it of unfair and abusive practices that have cost student
borrowers an estimated $4 billion in
extra interest. The American
Federation of Teachers and the
Consumer Financial Protection
Bureau are also suing Navient,
which was split from student loan company Sallie Mae in 2014. Navient has adamantly denied the allegations. Navient stock plunged after the AP reported details
from a Department of Education audit. The audit showed that tens of thousands of Navient borrowers may have been impacted. The company currently services roughly 6 million student loan customers.
At least one analyst downgraded the stock after the audit was released. Navient’s
Chief Executive, John Remondi,
published a letter to worried shareholders disputing the findings
in the audit. But the letter seems to
have done little good. The stock is
down 15.1 percent since the audit
was released.