Navient, the nation’s third-largest student-loan servicer, has been chastised for its customer service and is fighting lawsuits from the U.S. government, schoolteachers and multiple state attorneys general who say the Wilmington, Del.-based company routinely has mistreated customers.
Now Navient is contending with critics on a new front — shareholders.
Noting that the company’s performance has lagged the stock market, activist hedge fund Canyon Partners last year offered to buy Navient and take it private.
Navient refused, and Canyon threatened a proxy battle, building up a stake of about 10 percent of the company’s shares.
Instead, the two sides agreed last month to a cease-fire and jointly nominated two new directors. Navient’s board slate is expected to be approved at its annual meeting Thursday.
The maneuvering raises many questions, among them: Will Navient change? And how will borrowers fare?
One clue comes from Navient CEO John “Jack” Remondi, who asserted during the public battle that Canyon’s approach likely would lead to lower servicing quality, more delinquencies and defaults, and more intense regulatory scrutiny.
Under Remondi, Navient expanded into collections of local and state government tax receipts, health care bills and other consumer debts.
But Canyon wants Navient to quit making acquisitions that it says perform poorly and to stick with student loans, which it accuses the company of neglecting.