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Navient Corporation NAVI completed the divestiture of its Government Services business (“NGS”) to Gallant Capital Partners.
NGS includes Navient Business Processing Group, Duncan Solutions, Gila (D.B.A. Municipal Services Bureau), Pioneer Credit Recovery and Navient BPO. Across its various segments, NGS provides tech-enabled processing, collections and record lookups for tolling and parking authorities, outsourced government program management and support, government agency revenue management, and end-to-end payment processing solutions.
Around 1,200 employees are transferring with those businesses as part of the deal, which allows Navient to fully exit the business processing solution space.
Rationale Behind NAVI’s Sale of NGS Unit
NGS has been part of Navient’s broader portfolio, offering various services suited to its client's needs in the education and government sectors. NAVI’s divestiture of this business enables it to focus on core operations in education finance and business processing solutions.
By offloading this segment, Navient is expected to enhance its operational efficiency and financial performance.
Navient’s Other Efforts to Improve Operating Efficiency
The company aims to improve operating efficiency by undertaking various cost control initiatives. Its expenses declined, seeing a compound annual growth rate of 3.2% over the last five years (ended 2024). The company’s ongoing cost-reduction efforts are encouraging. In January 2024, it announced plans to undertake growth initiatives, including three major actions to reduce overall costs.
In sync with this, NAVI entered a servicing outsourcing agreement with MOHELA in April 2024. Outsourcing is a key facilitator of its ability to achieve lasting expense reduction. Nearly 900 Navient employees have now transferred to MOHELA, and its variable cost-servicing model is in effect.
Navient implemented a flatter organizational structure in the second quarter of 2024 to achieve its objectives, focusing on servicing and BPS transitions, expense reductions, and preparing for an 80-90% decline in employee count. Such moves are likely to reduce its expense base and spur bottom-line growth.
NAVI’s Price Performance & Zacks Rank
In the past six months, Navient shares have declined 11% against the industry’s rise of 30.3%.
Image Source: Zacks Investment Research
Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Similar Steps by Other Financial Firms
In February 2025, Barclays BCS completed the sale of its German consumer finance business, Consumer Bank Europe, to BAWAG P.S.K., a subsidiary of Austria-based BAWAG Group AG. This move aligns with the company’s plan to streamline its operations as outlined in the Investor Update in February 2024.