/https://specials-images.forbesimg.com/imageserve/6158ee64db7664e4a575c963/0x0.jpg?cropX1=0&cropX2=1910&cropY1=0&cropY2=1101)
Why 16 Million Student Loan Borrowers Will Get A New Student Loan Servicer
President Joe Biden (Photo by SAUL LOEB/AFP via Getty Images)
AFP via Getty Images
You may be getting a new student loan servicer.
Here’s what you need to know — and what it means for your student loans.
Student Loans
If you’ve been following the latest headlines on student loans, then you’ll know that there have been several major changes to your student loans. This year, three major student loan servicers — Navient, FedLoan (PHEAA) and Granite State — each announced that they will no longer be your federal student loan servicer next year. In aggregate, approximately 16 million student loan borrowers — or 35{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of all student loan borrowers — will be getting a new student loan servicer to manage their student loans, answers questions and collect your student loan payments. Here is the latest:
Why Navient quit your student loans
Navient, which services $300 billion of student loans for 12 million student loan borrowers, announced last week that Navient will exit federal student loan servicing with the U.S. Department of Education. (Here’s what this means for your student loans). The surprising move, which came days before a major government shutdown was averted, could leave nearly six million student loan borrowers with a new student loan servicer. Navient signed a definitive agreement to transfer its federal student loan servicing for U.S. Department of Education-owned student loan accounts to Maximus, another student loan servicer. Navient and Maximus have submitted a preliminary request for review to Federal Student Aid (FSA), but the U.S. Department of Education must approve the transfer from Navient to Maximus. Why did Navient exit student loan servicing for federal student loans? (Here’s why Navient quit your student loans). Navient was likely to face increase regulatory oversight from the U.S. Department of Education, Congress, state attorneys general and the Consumer Financial Protection Bureau (CFPB).
Student loans: FedLoan Servicing exits student loan contract
FedLoan Servicing, also known as the Pennsylvania Higher Education Assistance Agency (PHEAA), will not renew its 12-year-old contract with the U.S. Department of Education to service federal student loans. FedLoan Servicing services student loans for approximately 8.5 million student loan borrowers, which represents about 20{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of all federal student loan borrowers. FedLoan Servicing’s current contract will expire December 14, 2021. FedLoan Servicing is also the sole student loan servicer that services federal student loans for the Public Service Loan Forgiveness program, which helps student loan borrowers who work for a qualified public service or non-profit employer get student loan cancellation. The Public Service Loan Forgiveness program has been under increased scrutiny due to its 98{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} rejection rate. The good news is that major student loan forgiveness changes may come this week.
Student loans: Granite State will end federal student loan servicing
In July, Granite State Management & Resources, which is part of the non-profit New Hampshire Higher Education Association Foundation (NHHEAF) Network, also announced it will end its federal servicing contract to focus on servicing private loans. Granite State services student loans for approximately 1.3 million student loan borrowers. In 2020, another student loan servicer — CornerStone — decided to terminate its loan servicing contract (even though the contract was renewed to 2022) due to financial losses based on contract terms with the U.S. Department of Education.
Student loan borrowers: what you should do next
If you’re impacted by these major changes, here are answers to popular questions:
1. Are my student loans affected by these changes?
If your federal student loans are serviced by Navient, FedLoan Servicing, Granite State or CornerStone, then you will get a new student loan servicer. If you have a different student loan servicer, then that student loan servicer will continue to service your student loans.
2. Will private loans be impacted?
These announcements to change student loan servicers only apply to federal student loans. There is no impact to private student loans.
3. What do I need to do when my student loan servicer changes?
The U.S. Department of Education will notify you in writing about your change in student loan servicer. The Education Department will automatically assign you a new student loan servicer. For example, for Navient student loan borrowers, that new student loan servicer may be Maximus. Some FedLoan Servicing student loans have been assigned to MOHELA, another student loan servicer. Expect further communication from the U.S. Department of Education in the coming months. You don’t need to apply for a new student loan servicer.
4. What will change with my new student loan servicer?
Think of your new student loan servicer as customer service for your student loans. You should make student loan payments to your old student loan servicer until you are notified otherwise. If your student loans are in temporary forbearance due to Covid-19, remember that this student loan relief will end January 31, 2022. With your new student loan servicer, make sure to update your autopay information, contact information and any other changes to your employment, income and family size if enrolled in an income-driven repayment plan. (Here’s how to get student loan forgiveness).
5. Who is my student loan servicer?
If you’re unsure who your student loan servicer is, log into your Federal Student Aid (FSA) account and view your student loan servicer on the FSA Account Dashboard. Alternatively, you can call Federal Student Aid at 1-800-4-FED-AID (1-800-433-3243).
6. How do I contact my student loan servicer?
Here is the contact information for some major student loan servicers:
FedLoan Servicing (PHEAA): 1-800-699-2908; Granite State – GSMR: 1-888-556-0022; Great Lakes: 1-800-236-4300; HESC/Edfinancial: 1-855-337-6884; MOHELA: 1-888-866-4352; Navient: 1-800-722-1300; Nelnet: 1-888-486-4722; OSLA Servicing: 1-866-264-9762; ECSI: 1-866-313-3797; and Default Resolution Group (also known as Maximus): 1-800-621-3115 (TTY: 1-877-825-9923 for the deaf or hard of hearing). You can check in with your student loan servicer any time to review your student loan balance, ask questions and manage student loan repayment.
7. When do student loan payments restart?
Despite these major student loan servicers ending their federal contracts, your student loan payments will restart beginning February 1, 2022. The Biden administration has said that this current student loan relief is the final extension, so don’t expect continued student loan relief beyond that date. This also implies that the Education Department will assign you a new student loan servicer instead of extending temporary student loan forbearance.
Getting a new student loan servicer may be a source of frustration or it could be a reason to celebrate. It’s also a good time to review all your options for your student loans. Here are some popular ways to save money with your student loans: