JPMorgan Chase agreed to sell a $6.9 billion portfolio of student loans to Navient Corp., five days after the bank told shareholders it was looking to unload the holdings.
JPMorgan, which announced in 2013 that it would no longer make student loans, said April 13 that it booked a writedown on those debts as it explores options for their disposal. The sale includes about $3.7 billion in federally guaranteed student loans, less than half of which are securitized, and about $3.2 billion in whole private education loans, Navient said Tuesday in a statement. It didn't specify terms.
U.S. authorities have estimated that about one in four of the nation's roughly 44 million student debtors are either in default or struggling to stay current -- setting up a potential cascade of borrowers seeking forbearance or forgiveness on debt often backed by the government. Loan servicers such as Navient are the conduit between students and lenders, putting them into a position to help navigate aspects of repayment that can be confusing to borrowers.
"We welcome our new customers, and we commit to delivering best-in-class support to ensure a seamless transition," Navient Chief Executive Officer Jack Remondi said in the statement. "We will provide ongoing assistance to help our new customers continue to successfully manage their education loans."
Navient, the largest servicer of student loans in the U.S., expects to complete the acquisition in stages this quarter and eventually move the loans to its servicing platforms. The deal will probably be accretive to earnings this year, the Wilmington, Delaware-based company said.
The company, formerly part of Sallie Mae, is locked in a legal battle with the Consumer Financial Protection Bureau over allegations that the firm "systematically" cheated student debtors by taking shortcuts to minimize its own costs. Navient has disputed the regulator's lawsuit filed in a Pennsylvania federal court, and has argued that the agency itself is unconstitutional.