Navient to outsource student loan servicing as part of strategic actions

Navient announced strategic actions to simplify the company and reduce its expense base as a result of the review overseen by the board over the past several months. The strategic actions include outsourcing the servicing of its student loan portfolio to a third party; exploring strategic options for its business processing division-including potential divestment and streamlining the company’s corporate functions to align with a simplified business model. Navient has entered into a binding letter of intent that will transition its student loan servicing to Mohela, a provider of student loan servicing for government and commercial enterprises. This transaction is intended to create a variable cost structure for the servicing of the company’s student loan portfolio. Navient and Mohel will work toward ensuring a seamless transition in the coming months and providing customers with uninterrupted servicing of their loans. In addition, Navient has launched a process to explore a range of value-creating options for its business processing division. Through various subsidiary brands, this division provides high-quality business processing services for a variety of government and healthcare clients, including hospitals, toll-road authorities, state revenue divisions, and federal agencies. With the decision to outsource student loan servicing, exploring options for the business processing division increases the opportunities for shared cost reduction. Navient is working with financial and legal advisors to assist the company in exploring strategic options for this division, which may include a sale of the division in whole or in part. As it implements these actions, Navient also plans to reshape its shared services functions and corporate footprint to align with the needs of a more focused, flexible and streamlined company. Based on full-year 2023 operating expenses, approximately $400M, which is net of expected outsourced servicing expenses, could be eliminated under a scenario in which the three steps announced were completed. That scenario would also not include business processing revenue under a full-business divestiture scenario. Implementation of these transactions is expected to begin in 2024 and is expected to be largely complete over the next 18 to 24 months.