How America's Student Loan Giant Dropped The Ball
Staff say they were pushed to get borrowers off the phone quickly — leaving many in the dark about options to make big cuts to their student loan payments.
If you’ve ever fallen behind on your student loan payments, there’s a good chance you’ve received a phone call from someone in one of the sprawling corporate campuses of Navient Corporation.
Hundreds of people work the phones every day at Navient, which was long known as Sallie Mae until a split in 2014, chasing down overdue payments from the more than 12 million Americans who have a student loan serviced by the company. They operate under high pressure, current and former workers told BuzzFeed News, and in their jobs there is nothing more important than “hitting your numbers" — their employment prospects lived or died by whether they could keep call times down and resolve as many accounts as possible. Hitting numbers meant a bonus, but falling behind was dangerous. Miss your numbers too often, they said, and you’ll be fired.
That laser focus on slashing call times and hitting targets is hardly unique: it’s standard procedure in many call centers. But these are not typical call centers, and Navient is not a typical company. When it fails to do its job, it throws a wrench into government machinery built to help solve the student loan crisis — and for years, Navient has failed to do its job properly, according to a federal government lawsuit filed last month.
As America’s largest student loan servicer, Navient is tasked with far more than just collecting money. It is paid by the federal government to help student loan borrowers navigate the Education Department’s exceedingly complex system, answering questions and steering students into programs that will keep them out of default and allow them to pay back their loans.
But Navient’s high-pressure insistence on cutting call times and hitting targets often made it impossible to do that job adequately, according to interviews with nine former employees who worked as call center representatives or in technology at the company between 2013 and 2016.
None of the nine employees interviewed mentioned customer satisfaction as one of the main ways they felt their job performance was judged, or said they thought their jobs relied on satisfying customers.
A Consumer Financial Protection Bureau lawsuit filed in January claims that Navient systematically underserved and misled tens of thousands of students, doing everything from misapplying payments to steering borrowers into the wrong programs. In interviews with BuzzFeed News, former employees said that Navient’s high-pressure call center was one of the central reasons that borrowers were so dramatically underserved. So, too, employees said, was the company’s focus on profits, under-investing in things like technology and staff retention.
Because of Navient's practices, large numbers of low-income borrowers never took advantage of major government initiatives designed to address the student loan crisis, the lawsuit says. Navient's practices "prevented some of the most financially vulnerable borrowers from securing some or all of the benefits of plans that were intended to ease the burden of unaffordable student debt," the Consumer Financial Protection Bureau said in the lawsuit.
A Navient spokeswoman, Patricia Christel, disputed the idea that Navient's representatives were mostly judged based on numbers. She said that call center representatives are rated on a "number of factors," but that the largest factor is customer satisfaction and experience. The average call time, she said, was seven and a half minutes.
"Student loan repayment options involve complex material, and we hold ourselves to high standards driven by our commitment to provide excellent service to customers," said Christel in a statement to BuzzFeed News. The company pointed to its customer satisfaction results: 94% of borrowers in internal phone surveys report being satisfied with their service, Christel said, and its customers are 31 percent less likely to default on their loans than with other servicers.
In a January statement, the company called the CFPB lawsuit "unfounded" and said the suit's timing, filed days before the inauguration, reflected "political motivations."
When Navient and its employees focused on “hitting their numbers,” student borrowers suffered, former employees said. To keep down call times, which five former employees said were targeted between three and seven minutes or shorter, borrowers were frequently given inadequate or inaccurate information, former employees said. It was an unwritten but oft-stated company policy, thy said, to brush aside or ignore questions altogether, sticking to a script in order to cut down on call times.
Lynn Sabulski was hired to answer students’ questions, but she quickly realized that she couldn't do it while following the company's guidelines. At a Navient call center in Wilkes-Barre, Pennsylvania, she was tasked with taking dozens of inbound calls from student borrowers every day. "To keep call times down, you don't don't answer questions," Sabulski said. "If you didn't keep [call times] down, you would be fired. But there was not enough time to have a conversation and actually engage with students. So for a lot of people, it was a question of, 'Do I help this borrower and answer their questions, or do I rush through it and afford my groceries this month?'"
The pressure to hit numbers was so strong that three employees said they frequently experienced anxiety attacks or cried as they left the call floor, and turnover was so high that few of their colleagues had been at the company for more than six months. (Most former employees asked to be identified only by their first names because they still work in the call-center and financial industry.)
At times, two employees said, the consequences of Navient’s policies were more severe than a student borrower simply being ignored or shortchanged. Before the company revised its bonus structure at the end of 2014, employees would sometimes slot borrowers who could not afford their payments into a quick-fix temporary solution, called forbearance, as part of a race to clear loan balances and shave time off of phone calls, rather than enrolling them into income-based repayment.
The income-based repayment system — a central pillar of the Obama administration's efforts to ease the burden of student debts — allows people to reset their loan repayments as a fixed percentage of their monthly income. But the process of enrolling people in income-based plans, employees said, was time-consuming, requiring tax forms and paperwork to be filled out and returned. For a call center worker trying to hit their numbers, too many of these lengthy enrollments could be a real problem.
Forbearance, on the other hand, lets borrowers to temporarily pause their loan repayments. For those out of work for a few months, it can be a lifesaver. Forbearance is also often "needed," Navient said, as an early step in enrolling borrowers in income-based plans: people cannot sign up until they are current on their payments, and others need time to fill out the long application forms.
For the many low-income borrowers Navient interacted with, income-based repayment plans were a much better deal. Those with low payments — which can often be $0 a month for the poorest borrowers — don’t have interest added to their loan balances, and after 20 years on income-based plans, loans are forgiven altogether. Forbearance, on the other hand, lasts for a maximum of three years, and borrowers emerge with loan balances swollen by interest charges, and no progress toward forgiveness.
But enrolling too many people in income-based repayment, one employee who worked at the company in 2014 said, was taking a risk. It would sometimes drag phone calls so long that it would earn you a reprimand. The CPFB’s lawsuit echoed these employees’ claims, alleging that Navient employees “have routinely failed to invest the time and effort necessary to help financially distressed borrowers identify and enroll in affordable repayment plans most appropriate for their financial situation.”
Navient pointed to the fact that 49% of the total loan balances it services are enrolled in an income-based plan, although that could be in part because of high-balance borrowers like graduate students, who have proven more likely to enroll.
Income-based repayment was one of the key pieces of the Obama administration’s attempts to combat the student debt crisis, and it expanded rapidly under Obama — especially, data shows, among graduate students and those with relatively high loan balances. But for less savvy borrowers, enrolling in income-based repayment can prove difficult, with large amounts of paperwork, including forms that must be completed annually, and long-term payoffs — like 20-year forgiveness and lack of compounding interest — that are hard to understand.
Certainly, the Education Department bears some responsibility for creating the complex process. According to the CFPB’s lawsuit, more than half of Navient borrowers said they couldn’t navigate the servicing paperwork on their own.
Navient and other servicers, though, appear to have become a bottleneck in the process of enrolling students in the programs. And student debt scammers have capitalized on the confusion, luring vulnerable borrowers into paying hundreds and even thousands of dollars to enroll in the repayment plans available for free through servicers like Navient and from the government directly.
Trudy, a customer service representative who began to work at the Fishers, Indiana campus in early 2014, said her colleagues frequently focused only on enrolling borrowers in forbearance, making no mention of income-based repayment. When students called asking for help with multi-step income-based repayment applications, she said, she sometimes saw colleagues simply hang up rather than walk them through the process. It was only once Navient started offering employees a bonus for enrolling borrowers in income-based repayment, in early 2015, Trudy said, that there was any effort to enroll people in the plans.
“The people who succeeded at Navient were the ones who either didn’t have a problem not providing adequate service, or people who were willing to do that in exchange for a paycheck,” Sabulski said. “People with high levels of empathy struggled.”
Navient’s aging, clunky technology meant mistakes — like skipping or misapplying payments — were frequent and difficult to correct, according to two employees who worked in data-entry and one who managed its internal technology. One data entry employee said he worked on a computer so old it had a black screen and blinking green letters. Catching and correcting mistakes was difficult on the stuttering technology, he said.
But some employees emphasized that Navient itself was faced with an impossible task, and two employees said they believed that the lawsuit was targeting Navient for problems that the company did not bear responsibility for. Too often, employees said, borrowers came to them knowing nothing about student loans. They didn't know where their loans came from, what interest rate they paid, or even what interest was. People who took out private loans grew angry when they were denied income-based repayment, even though the option isn't available to private borrowers.
Many borrowers didn't need to be steered into forbearance plans, said Brittany, an employee who began working in Fishers in 2015, after employees said Navient changed its compensation structure to better reward enrolling borrowers in income-based repayment. Students themselves wanted the quick-fix solution of forbearance, and preferred not to deal with the lengthy paperwork required to enroll in other options. They jumped on the chance to suspend their payments for a few months, not understanding or caring that they were accruing interest the whole time, causing their loan balances to swell.
Borrowers often ignored the warnings employees were required to give about forbearance, Brittany said. When their forbearance was up, the borrowers would call back, surprised and angry to find that they now owed more money than they thought, but unwilling to put the work into enrolling in income-based plans.
At Navient's call centers, Brittany said, managers sometimes tried to turn the pressure put onto their employees into a more lighthearted experience, creating competitions between teams. During March Madness, her managers created a bracket on the wall and had agents compete against one another to collect payments and resolve accounts.
"Competitions like this were a lot of fun and made getting yelled at easier," she said. "But it could also be added pressure for agents."