Rhode Island Treasurer Seth Magaziner yesterday sent a letter to the U.S. Securities and Exchange Commission in response to Navient Corporation's (NASDAQ: NAVI) attempt to deny shareholders the chance to vote on his proposal requesting that the company provide investors with information on the measures it is taking related to risks associated with the student loan debt crisis.
"Shareholders have good reason to be concerned about risks associated with the student loan industry," said Treasurer Magaziner. "Nationally, there are more than 44 million borrowers with an estimated $1.5 trillion in student loan debt, an amount second only to mortgage debt."
Navient, which is facing lawsuits by four states and the Consumer Financial Protection Bureau, as well as a class-action lawsuit from investors, has appealed to the U.S. Securities and Exchange Commission (SEC) for permission to deny shareholders a chance to vote on the shareholder proposal, claiming that the growing level of unsustainable student loan debt, and the risk the company is taking on is "ordinary business".
"This is a crisis for millions of Americans, not 'ordinary business'. In Rhode Island, 64% of graduates carry an average of $32,920 of student loan debt. As long-term investors in Navient, it is our duty to members to ensure that the company is adequately responding to this crisis," added Treasurer Magaziner.
The U.S. Department of Education reports that the number of borrowers not making payments on their federal student loans within three years of leaving college has risen to 11.5%.
Navient Corporation manages more than $300 billion in federal and private student loans for approximately 12 million borrowers. Over a million borrowers with Direct Loans at Navient, which is the nation's largest servicer of student loans, have defaulted on their student loans. These defaults create additional financial hardships for Navient customers, which may negatively impact the company and shareholders.
The CFPB received 6,274 complaints about Navient in the period from September 1, 2016 - August 31, 2017, which is four times the number of complaints received about any other student loan servicer during that period.
It is in this context that Treasurer Magaziner is requesting that Navient's Board of Directors report on the governance measures the company has implemented to more effectively monitor and manage financial and reputational risks related to the student loan crisis. This information will help investors assess whether Navient is adequately meeting the challenges faced by growing student loan delinquency trends.
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You can read Treasurer Magaziner's letter to the SEC at the link below.
Contact: Randy Rice, Deputy Director of Communications (401) 487-3258 / randall.rice@treasury.ri.gov