Concerned with Navient Corp.’s actions to its shareholders regarding how it’s handling the student loan debt crisis, Rhode Island Treasurer Seth Magaziner sent a letter to the Securities and Exchange Commission (SEC).
Magaziner had submitted a proposal in late January to Navient that, should shareholders vote in favor of, the company would have to provide information to its investors on how it takes risks associated with student loans. Navient, which manages more than $300 billion in federal and private student loans for its 12 million borrowers, refused to honor this proposal, denying any votes in order to keep its debt risk measures a secret.
“Shareholders have good reason to be concerned about risks associated with the student loan industry,” Magaziner said in a statement. “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.”
Magaziner then filed a letter to the SEC Friday. He calls for Navient’s board of directors to report on the governance measures implemented relating to the student loan crisis, with the information helping investors decide whether the company is succeeding against growing loan delinquency trends.
“We respectfully request that Staff decline to grant the relief requested by the Company, as the Company has not met its burden of proof in demonstrating that the Proposal relates to the Company’s ordinary business operations or that the Proposal has been substantially implemented,” the letter read.
According to a statement from the Treasury obtained by CIO, Navient faces a variety of lawsuits, including one from the Consumer Financial Protection Bureau (CFPB) and a class-action lawsuit from investors. The company appealed Magaziner’s proposal to the SEC, stating that there was no reason to allow shareholders the information on Navient’s student debt risk procedures, calling the risk “ordinary business.”
Between September 2016 and August 2017, the CFPB received more than 6,000 complaints about Navient, four times the amount received by any other student loan servicer during that time.
“Like the foreclosure crisis, the student loan crisis is a significant social policy issue deserving attention by shareholders,” said Heather Slavkin Corzo, director of corporations and capital markets for the AFL-CIO, which co-filed the shareholder proposal at Navient with Magaziner. “We call on the SEC to let Navient’s shareholders vote on this important proposal,” she added.