Thread regarding Navient layoffs

How Navient maximized profits...

SumZero: So Navient is actually incentivized to put student borrowers into delinquency?

Taylor Mann, Pine Capital Partners: That’s the one question that really cuts through and clarifies where the heart of this trade lies: the moral hazard. Prior to the contract renewal, the majority of Navient’s bottom-line stemmed through default collection – not debt servicing. Basically, when a borrower goes into delinquency, Navient actually gets paid a percentage of every dollar that it collects from the borrower instead of an extremely small fixed-fee for collecting a regular repayment.

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