Amid growing concerns over what the Consumer Financial Protection Bureau (CFPB) described as "systemically and illegally failing borrowers at every stage of repayment" Navient Corp., the nation's largest student loan servicer, is seeking to block a shareholder proposal - filed by Rhode Island General Treasurer Seth Magaziner in December - by claiming that record borrower defaults are part of "ordinary business" for the company.
"As shareholders, we have an obligation to make sure that the companies in which we invest are being run in a responsible and sustainable manner," said Rhode Island General Treasurer Seth Magaziner. "A record numbers of Americans are being crushed by student debt. It's unconscionable that the company servicing their loans is trying avoid its obligation to protect shareholders from the financial risks posed by the prospect of escalating student loan defaults."
Last month, Treasurer Magaziner filed a shareholder proposal requesting that Navient provide shareholders with information regarding the company's ability to service customers in default, or at risk of defaulting on their student loans. The State of Connecticut and Laborers' International Union of America are co-filers of the shareholder proposal.
On Friday, Navient asked the U.S. Securities and Exchange Commission (SEC) for permission to block Rhode Island's proposal from appearing on the shareholders' ballot, a tactic commonly used by companies seeking to avoid accountability to their investors. Magaziner has notified the SEC that Rhode Island intends to contest Navient's move.
Navient's move to block the Rhode Island proposal comes a week after the Consumer Financial Protection Bureau (CFPB) announced that it is suing the company for "systematically and illegally failing borrowers at every stage of repayment."
An estimated 8.1 million federal student loan borrowers are currently in default. In Rhode Island, an estimated 64% of college graduates have student loans, with an average debt of $32,920, according to the non-profit Institute for College Access & Success.
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Contact: Evan England, Director of Communications - Office of the General Treasurer (401) 439-2199 (mobile) evan.england@treasury.ri.gov