Navient to sell government services unit

December 27, 2024 2

WILMINGTON — Navient Corporation has agreed to sell its government services unit to an affiliate of Los Angeles-based investment firm Gallant Capital Partners. The sale would shed 1,200 jobs from Navient, including a few from its Delaware offices.

The government services business includes six other subsidiaries, such as Navient Business Processing Group, and was roughly valued at $50 million as of the end of September, according to financial documents filed with the U.S. Securities and Exchange Commission. However, due to a change in the deal structure, the sale will also include approximately $20 million of deferred tax assets to Gallant.

The deal is anticipated to close in the first quarter of 2025. The final sale price was not disclosed by Navient representatives.

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Navient is a major student loan servicer that handled a quarter of student loans in the United States as of 2018. But in recent years, the Wilmington-based company has been besieged by lawsuits and criticism for alleged predatory loan practices. This year, Navient has been refocusing its operations under the leadership of its CEO David Yowan.

In its third quarter report, Navient shared with investors that a major contract would not be renewed in 2025, and it was uncertain that a federally- funded program that is a significant part of a contract would continue.

That prompted the government services business to be written down significantly, and Navient recorded a $138 million write-down of “goodwill and intangible assets.” Navient anticipates it will record a loss of between $25 and $35 million in the fourth quarter of 2024.

The deal with Gallant comes at the conclusion of a long year for Navient. In February, the company notified shareholders that it planned to transfer millions of student loan debt to Missouri Higher Education Loan Authority (MOHELA), at the time telling investors it planned to exit student loan servicing.

In the summer, Navient then closed a $369 million deal to sell Xtend Healthcare, its health care services unit, to health technology company CorroHealth. At the end of the third quarter, Navient settled a lawsuit with the Consumer Financial Protection Bureau over misleading practices for $120 million – as well as banning the company servicing federal student loans entirely.