CIT Group to outsource student loan servicing to PHEAA
CIT Group, a provider of financing to small businesses and middle market companies in the US, has completed and executed a service agreement with the Pennsylvania Higher Education Assistance Agency (PHEAA) to service $7.4bn of the Company's portfolio of government-guaranteed loans currently serviced by CIT.
Under the terms of the agreement, CIT will outsource all of its student loan servicing activities that are currently provided by its subsidiary Xpress Loan Servicing (XLS).
PHEAA conducts its commercial student loan servicing activities as American Education Services (AES), which currently services approximately $1 billion of CIT's student loan portfolio.
The servicing of the additional $7.4bn portfolio is expected to be transferred to AES between January and March 2011. As a result, CIT will close its XLS offices in Cleveland and Cincinnati, Ohio.
CIT Group chairman and CEO John Thain said CIT Group's decision to outsource the servicing of its student loans reflects the company's ongoing efforts to improve operating efficiencies.
"We expect that PHEAA will provide our customers with the same high-quality service that they currently receive," Thain said.
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