Wells Fargo is helping to finance the sale of its own portfolio of federally guaranteed student loans.
Navient, the student loan servicer spun off from SLM Corp., said today it has closed on a $10 billion asset-backed commercial paper facility that will finance the acquisition of Federal Family Education Loan Program (FFELP) portfolio, including an $8.5 billion portfolio it has agreed to purchase from Wells Fargo.
The asset-backed conduit matures in November 2017 and was arranged by Wells Fargo Bank and supported by JPMorgan Chase Bank and Royal Bank of Canada.
Navient president and CEO Jack Remondi said last week that acquisition of Wells’ FFELP portfolio would leverage the servicer’s scale. Navient is the largest servicer of both federal and private education loans and this transaction brings the total size of its portfolio to more than $310 billion.
A purchase price was not announced. The transaction supports Wells Fargo's "ongoing strategic focus on its private student-lending business" the bank said a press release Thursday.
Wells Fargo stopped issuing FFELP loans in June 2010, when a law overhauling the student loan business took effect. The law prohibited the federal government from subsidizing banks to issue federally insured loans.
The loans included in the Navient sale have been serviced since 2011 by American Education Services and Xerox Education Services. Navient anticipates converting a majority to its servicing platform in 2015. Rates, terms, and benefits will remain unchanged.