Borrowers who took out federal student loans through Wells Fargo will soon have a new place to send their checks. The bank on Thursday said it will sell $8.5 billion worth of federal student loans to Navient.
Borrowers who took out federal student loans through Wells Fargo will soon have a new place to send their checks.
The bank on Thursday said it will sell $8.5 billion worth of federal student loans to Navient.
In a press release, Navient President and CEO Jack Remondi said the deal will bring half a million customers to his company.
“We’re also pleased to deliver on a key business objective to leverage our servicing scale and grow our portfolio,” he said.
Navient’s student loan portfolio totals more than $300 billion and more than 12 million customers. However, the Navient brand is likely unknown to most Americans, as the company was formed earlier this year as a result of a “strategic separation” from the struggling student loan giant Sallie Mae. Under the terms of the separation, Navient kept the federal loan portfolio, while Sallie Mae will focus on private loans going forward.
For its part, Wells Fargo said it is deeply committed to private student loans, though it’s now out of the business of federal loans.
“By selling these (Federal Family Education Loan Program) loans to Navient, Wells Fargo will be in a position to focus more on meeting the needs of our private student loan customers,” said John Rasmussen, who heads the bank’s education financial services division.
Both the Navient spinoff and Wells Fargo’s sale of its federal loans are the result of a 2010 federal law which stopped private banks from acting as intermediaries for federal student loans. Wells Fargo has not issued federal student loans since that time, instead having its federal loans serviced by 2 companies, American Education Services, and Xerox Education Services.
Navient said borrowers whose loans are being sold by Wells Fargo can expect to have their loans fully integrated into Navient’s system by 2015. Rates, terms, and benefits won’t change as a result of the deal, the company said.