WILMINGTON, Del.—American Federation of Teachers President Randi Weingarten will demand answers Thursday from the board of student loan servicing giant Navient at its annual shareholder meeting, citing its failure to protect service members, its attempts to push borrowers into forbearance and its lobbying against regulations that protect students.
More than a million Navient borrowers have defaulted on their student loans, and the firm deploys aggressive debt collection strategies, including repeated robocalls, to rake in revenue. The largest U.S. student loan servicer, Navient has been sued by the Federal Deposit Insurance Corp. and the Department of Justice and is under investigation by the Consumer Financial Protection Bureau.
The loan servicer oversees over $300 billion in debt held by more than 12 million disproportionately African-American and minority borrowers, and it depends on government contracts to thrive.
Weingarten will endorse a shareholder proposal filed by Rhode Island Treasurer Seth Magaziner, co-filed by the AFL-CIO and supported by the AFT, requesting disclosure on the actions the company has taken to manage the risks related to the student loan crisis.
“Navient epitomizes all that is wrong about the student loan servicing industry—its predatory nature that fleeces rather than helps students,” Weingarten said. “Instead of working to fix this national student debt crisis, Navient profits off it, while spending millions on lobbyists to remove even the slightest check on its activities. It overcharged our servicemen and servicewomen and allegedly tells its call-center staff to push forbearance—a temporary stop on or reduction in student loan payments—against borrowers’ best interests.
“I hope that by asking tough questions on behalf of shareholders and student borrowers, the Navient board may understand they can’t hide, and then will begin to act in a prudent and responsible manner.”
Weingarten holds a proxy to attend the annual meeting, to be held under tight security at Navient’s headquarters at 123 Justison St., Wilmington, Del., at 8 a.m. Thursday. The AFT represents 1.7 million members, many of whom own shares in Navient through their pension funds.
New York City Comptroller Scott Stringer, on behalf of five city pension funds, has voted in favor of the Rhode Island and AFL-CIO proposal. Navient’s board has recommended a vote against.
Rhode Island Federation of Teachers and Health Professionals President Frank Flynn, who is an AFT vice president, said: “Navient can’t have it both ways. It profits off the student loan crisis through government contracts, but when mild questions are asked of its strategy to manage risk, it tries to prevent public scrutiny. There is a role for student loan servicers, but only if they align their strategy with the long-term interests of shareholders and borrowers, not the whims of Wall Street. RIFTHP is committed to doing everything it can to reduce the onerous burden of student debt, and seeking transparency from loan servicers is an important component of that advocacy.”