This company never serviced student loans in repayment. Now it's handling 9 million accounts.

By Jillian Berman

Aidvantage is part of a sprawling government contractor that's faced scrutiny from consumer and labor activists.

For Jenna Crovo, figuring out her monthly student-loan payment has been "an absolute nightmare."

She says she struggled for months to obtain consistent and accurate information about her loans from Aidvantage, the student-loan servicer handling her loans, in the lead up to student-loan payments resuming in October. Logging onto her portal with the company was "excruciating," she said, but ultimately when she got through before her first payment was due, the $203-monthly payment the website showed her was higher than she expected.

It was also more than the monthly payment she was quoted on the government's website and more than the 36-year-old could afford on the $40,000 she makes a year in take home pay. At times, she said she was told by Aidvantage they'd submitted her application to enroll her in an affordable repayment plan. At other times, she'd receive communication indicating she still owed $203 a month. Crovo's calls to Aidvantage ended in frustration.

"I was disconnected four separate times," she said.

For borrowers like Crovo, the name Aidvantage is not very familiar. That's because they are all new to the company. Aidvantage took over the portfolio of student loans serviced by Navient (NAVI) as well as much of the company's federal student loan staff when Navient exited the federal student-loan system during the pause on student-loan payments in 2021.

Aidvantage is part of Maximus (MMS), a sprawling publicly traded government contractor based in northern Virginia that's generated scrutiny from consumer activists over its U.S. government contracts to work with borrowers who have defaulted on their Department of Education-held student debt. Now, through Aidvantage, the company is servicing 9 million student loans in repayment, or those where the borrower hasn't defaulted, for the first time, as payments resume.

Advocates and lawmakers who scrutinized Maximus's work with defaulted borrowers worry that borrowers whose loans are serviced by Aidvantage could be at risk of facing challenges. Already in the first several weeks of repayment, borrowers working with Aidvantage have said they've struggled to reach the company either by phone or online and have received conflicting or incorrect information. Between mid-August and mid-November, the Consumer Financial Protection Bureau received more than 800 complaints related to federal student-loan servicing about Aidvantage, according to its complaint database. Between September 2022 and August 2023, complaints about Maximus accounted for 12% of federal student loan complaints, according to the CFPB.

"They don't have experience servicing pre-default loans," said Persis Yu, managing counsel and deputy executive director for the Student Borrower Protection Center, an advocacy group. "The loans that they do have experience with are the defaulted loans and we've seen a lot of problems with the ways that they've handled that portfolio. There is a lot of skepticism about whether or not borrowers whose loans are [newly] placed with Aidvantage are going to get the service that they need."

The company declined to comment on the experience of any specific borrower and referred questions about the return to student-loan repayment in general to the Department of Education. But Eileen Rivera, a Maximus spokesperson, wrote in an email that as a servicer working for the Department of Education's Office of Federal Student Aid, the company's operations are conducted with "expansive oversight" from the agency. The company works "in conjunction with FSA on a daily basis to assist FSA's borrowers and proceeds at the direction of Federal Student Aid in order to assist Federal Student Aid in the operation of FSA's programs for borrowers," she wrote.

A Department of Education spokesperson wrote in an email that, "at this time, Aidvantage is meeting or exceeding all contractual requirements."

The agency spokesperson also said they are "carefully monitoring" the return to repayment and working closely with servicers to make sure they're providing borrowers with necessary information and holding servicers accountable when they don't. The Department also approved Maximus's takeover of the Navient servicing portfolio after determining the government's interests would be adequately protected in the deal, the spokesperson added.

Over the years, Maximus has defended its work for the Department of Education more broadly, highlighting the agency's continued confidence in the company to work with borrowers. About their student-loan work, the company has also said in the media and in a letter to lawmakers that "it is imperative we get it right."

Maximus's Aidvantage is servicing federal-student loans in repayment for the first time during an unprecedented period for the student-loan system. Roughly 28 million borrowers resumed student-loan payments after a more than three-year pandemic pause in October. Borrowers across a variety of servicers have reported facing challenges during the return to repayment and there's evidence that federal student-loan servicers have generally struggled to provide adequate customer service to borrowers during this period. Amid the confusion, some 40% of student-loan borrowers with a bill due in October missed the payment, the federal government said.

Both the trade organization representing servicers and the government have cited a lack of funding as part of the reason for borrowers' challenges. There are four main student loan servicers, including Aidvantage, handling the bulk of accounts. Congress didn't provide the Department of Education, which pays servicers for this work, with its full funding request.

The organizations "across the board" cut staff and customer-service hours in the wake of the decision. Servicers have also said they're being asked to implement a variety of changes to the student-loan system - which are both confusing to borrowers and challenging for servicers to put in place - all at once.

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In the weeks and months following the onset of the pandemic, thousands of borrowers were still having their paychecks seized to repay defaulted-student debt, despite the pause on student-loan payments, interest and collections.

For months, Maximus, which the government hired to work with borrowers who have defaulted on their Department of Education-held student debt, tried to shut down the machinery that resulted in wages being garnished, according to documents filed as part of a lawsuit accusing the Department of Education of illegally garnishing borrowers' wages.

Maximus has no role in establishing wage garnishment, an action that can only be taken by the Department of Education's Office of Federal Student Aid, Rivera, a Maximus spokesperson, wrote in an email. "Maximus is a vendor for FSA for the maintenance of FSA's system of record. It does not receive, hold, or process borrower funds," she wrote.

Still, the company played an integral part in the government's efforts to wind down wage garnishment at the height of the pandemic, which was the subject of litigation. Maximus called and wrote to employers that were seizing workers' paychecks and rolled out a system update aimed at processing orders to stop wage garnishment in a timely fashion, according to documents filed in federal court in the District of Columbia.

In mid-May 2020, some borrowers were still having their paychecks seized. The head of the Office of Federal Student Aid at the time visited a Maximus vendor "to physically observe and confirm that FSA's instructions regarding employer and borrower notifications were being properly executed," he said in court documents. But Maximus and the government struggled to completely stop employers from seizing workers' funds to pay defaulted student debt.

By the end of October 2020 - more than six months after the pause on student-loan payments and collections began - the government was still receiving wages garnished by about 450 employers, the Department said in court documents. In mid-November 2020, the number of employers still getting checks through to the agency finally dropped to just eight after the Department of Education simply closed the post-office box where employers were sending the money they'd seized from workers with defaulted student loans, court documents show.

'There is a lot of skepticism about whether or not borrowers whose loans are [newly] placed with Aidvantage are going to get the service that they need.'Persis Yu, deputy executive director, Student Borrower Protection Center

Advocates like Yu are worried about Maximus taking on a larger role in the student-loan program, given what she described as the company's key role in the controversy that saw the government accused of illegally garnishing borrowers' wages during the height of the pandemic, as well as other litigation surrounding the company's work with borrowers with defaulted student loans.

"It seems like they were letting a bunch of borrowers down before, so why should we reward them with another contract where they need to do a new set of skills?" Yu said.

In separate litigation, Maximus has been accused of not providing borrowers who defaulted on their loans with information that could help them avoid having their Social Security checks and tax refunds garnished in a case they ultimately settled. At the time, Rivera said it is Maximus's "standard practice to provide defaulted borrowers information on loan rehabilitation and consolidation, and, if borrowers request, we work with them on processes that are clearly outlined at StudentAid.gov." That suit, which was filed in federal court in New York, later settled. The terms were not disclosed.

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12-20-23 1130ET

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