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(Note: This article has been changed from a previous version to correct references to Navient's role in the overhauled servicer program.)

When the Education Department this week announced a list of finalists for the student loan servicers that will receive contracts as part of a planned overhaul of the system, one name was noticeably absent.

Navient Corporation, one of the country's largest student loan servicers, was not listed as a finalist or as an organization that was tapped to lead team bids. Some consumer advocates and critics of the company saw it as a victory for efforts to hold Navient accountable for a track record of poor management. However, the company said it was selected to participate in the revised program, dubbed Next Gen, as a subcontractor and part of a team of servicers.

"Navient did not submit an individual bid for Next Gen -- we bid as part of a team, and our team was one of those selected to move forward," Paul Hartwick, a company spokesman, said via email.

The company's portfolio included $215 billion in outstanding student loan debt as of the last quarter of 2017 -- the third most of any loan servicer. In recent years, though, it became critics' poster child for the worst aspects of the student loan industry. The Consumer Financial Protection Bureau and the attorneys general of Illinois and Washington sued Navient, saying it had illegally failed borrowers at every stage of the repayment process.

For example, the lawsuit alleged that Navient wrongfully assessed late fees even when borrowers made payments and steered other borrowers toward forbearance, leading to the accrual of interest on their loan principal, rather than other repayment options.

The Trump administration is conducting a competitive bidding process to select contractors for multiple components of the new servicing system. The Education Department plans to build a single website to manage loan payments that all borrowers will use regardless of their servicer. It also wants to break up several components of the back end of the loan servicing system and award separate contracts for functions like data processing to contractors.

Among the companies listed as finalists for a business process operations contract were Edfinancial Services LLC, General Dynamics Information Technology Inc., Missouri Higher Education Loan Authority (MOHELA), Nelnet, Oklahoma Student Loan Authority (OSLA), Pennsylvania Higher Education Assistance Agency (PHEAA), Teleperformance​, Trellis Company and Utah Higher Education Assistance Authority.

Colleen Campbell, associate director for postsecondary education at the Center for American Progress, said the fact that Navient was not included among those finalists was “absolutely” a reflection of the company’s prior performance.

“If you’re going to put into a contract solicitation and into appropriations language that past performance matters, there’s no legitimate way to put a company into the system that has such a poor track record of performance for borrowers,” she said.

Navient had argued the CFPB lawsuit was unfounded and politically motivated.

“We are pleased to be progressing through the process as a member of one of the selected teams,” Hartwick said.

Persis Yu, director of the Student Loan Borrower Assistance Project at the National Consumer Law Center, said it was notable that the company would not be a contender for one of the largest servicing contracts.

“It’s encouraging to see that, because Navient has had so many issues with compliance,” she said.

But Yu noted that other servicers have faced complaints from borrowers. For example, PHEAA has been sued over its management of the Public Service Loan Forgiveness program and the TEACH grant program.

She said the new servicing system must allow the department to hold servicers accountable for their performance.

“That’s always been our big concern -- making sure the government is able to hold individual contractors responsible while streamlining the experience for borrowers,” she said.

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