Facing charges of unethical practices, Navient seeks to suppress shareholder proposal
Amid growing concerns over what
the Consumer Financial Protection Bureau (CFPB) described as "systemically
and illegally failing borrowers at every stage of repayment" Navient
Corp., the nation's largest student loan servicer, is seeking to block a
shareholder proposal - filed by Rhode Island General Treasurer Seth Magaziner
in December - by claiming that record borrower defaults are part
of "ordinary business" for the company.
"As shareholders, we have an
obligation to make sure that the companies in which we invest are being run in
a responsible and sustainable manner," said Rhode Island General Treasurer
Seth Magaziner.
"A record numbers of Americans are being crushed by student debt. It's unconscionable that the company servicing their loans is trying avoid its obligation to protect shareholders from the financial risks posed by the prospect of escalating student loan defaults."
Last month, Treasurer Magaziner
filed a shareholder proposal requesting that Navient provide shareholders with
information regarding the company's ability to service customers in default, or
at risk of defaulting on their student loans. The State of Connecticut and
Laborers' International Union of America are co-filers of the
shareholder proposal.
On Friday, Navient asked the U.S.
Securities and Exchange Commission (SEC) for permission to block Rhode Island's
proposal from appearing on the shareholders' ballot, a tactic commonly used by
companies seeking to avoid accountability to their investors. Magaziner has
notified the SEC that Rhode Island intends to contest Navient's move.
Navient's move to block the Rhode
Island proposal comes a week after the Consumer Financial Protection Bureau
(CFPB) announced that it is suing the company for "systematically and
illegally failing borrowers at every stage of repayment."
An estimated 8.1 million federal
student loan borrowers are currently 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.
Read
Treasurer Magaziner's letter
to Navient (NASDAQ: NAVI) here.
Read
Rhode Island Treasury's shareholder proposal with Navient here.