Earlier this year, Wells Fargo announced plans to get out of the payday loan-like business of direct deposit advances. Now it looks like the banking giant is getting ready to shed another aspect of its business: government-guaranteed student loans.
The Wall Street Journal reports that Wells Fargo struck a deal to sell $8.5 billion of loans to the loan management firm Navient, which in part means consumers will have to change the name of the company they send monthly payments to.
Navient, the largest servicer of federal and private student loans, was spun off from Sallie Mae earlier this year.
Wells Fargo, which had previously moved $9.7 billion in government-guaranteed loans to its held-for-sale portfolio in July, did not disclose the cost of the sale.
Separating the loans from the rest of the company’s student loan portfolio appears to be a long time coming. The bank stopped originating federal student loans back in 2010.
Officials with Wells Fargo say the decision to sell the loans was related to their relatively low-yield.
“They’re not strategic. We don’t have bigger relationships with most of those customers,” CFO John Shrewberry tells the WSJ.
Even with the sale of government-backed loans, Wells Fargo won’t be getting out of the private student loan business anytime soon.
The company is currently the largest private student lender among U.S. banks with $11.9 billion in loans outstanding.
Wells Fargo to Sell Government-Backed Student Loans to Navient [The Wall Street Journal]
by Ashlee Kieler via Consumerist
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