Citing a record number of student loan defaults, General Treasurer Seth Magaziner has filed a shareholder proposal with Navient Corporation (NASDAQ: NAVI) asking the student loan servicer to conduct a comprehensive review of the company's ability to adequately serve customers in, or at risk of, default.
"The student loan crisis is threatening the financial security of millions of Americans. It is our duty as shareholders to ensure that the companies we invest in have a credible plan for how to address growing levels of debt and delinquency", said Rhode Island General Treasurer Seth Magaziner.
Navient, which was spun out of Sallie Mae in 2014, describes itself as the "nation's leading loan management, servicing and asset recovery company." Last year, the Consumer Financial Protection Bureau received more complaints about Navient than any other Federal student loan servicer.
An estimated 8.1 million federal student loan borrowers are currently in default, with one in every four student loan borrowers in either delinquent or 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.
"With average tuition rising more than 200 percent in the last two decades alone, college is becoming more expensive while becoming increasingly more important," said Travis Escobar, president of the Millennial Professional Group of Rhode Island. "Rhode Islanders have the 4th highest student loan debt in the country. This crisis is preventing many millennials from achieving financial security. We need solutions to prevent more young people from defaulting."
According to the Federal Reserve Bank of New York, the amount of student loan debt has increased from $0.26 trillion in the first quarter of 2004 to $1.28 trillion in the first quarter of 2016. At the same time, the 90-day delinquency rate on student loans has grown from 6.3 percent in 2004 to 10.9 percent in 2016.
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Contact: Evan England, Director of Communications - Office of the General Treasurer (401) 439-2199 (mobile) evan.england@treasury.ri.gov