Written by: Sarah E.J. Collier, J.D.
FedLoan Servicing, Granite State Management and Resources, and Navient decide not to renew contracts, WHAT DOES THIS MEAN FOR YOU!
Student loan debt is one of the biggest stressors that overwhelm young adults (as well as their parents). While the pandemic is proving not to be over yet, federal student loan payments, according to the Department of Education (DOE), are to resume on January 31, 2022. However, a new wrinkle has been added: FedLoan Servicing (July 8, 2021), Granite State Management and Resources (July 20, 2021) and Navient (September 28, 2021) have decided not to renew their contracts with the Federal Government which are set expire at the end of 2021. This affects more than 15 million borrowers according to The College Investor. –As you can see, the close timing and shear high volume of student loan account transfers is a cause for some concern among borrowers.
What does this mean for you, the borrower?
Over the next few months you should be contacted by your new loan servicer. The biggest concerns with any loan servicer transfer is whether the borrower is effectively informed of the transition and whether accurate student loan information is transferred to the new servicer.
What should you do to protect yourself?
Make sure your contact information with your student loan servicer is up-to-date. This is critical because if they do not have a current email or mailing address (their most common modes of communication) you may not receive crucial information regarding the student loan account transfer.
Save a copy of payment history, correspondence and other student loans records. Documents you will want to print include those with information detailing outstanding loan balance, payment history, status on Public Service Loan Forgiveness, all account related letters, as well as any other information pertinent to your loan (including tax related documents).
Review and print copies of your credit report, including the section that shows payment history on your loans. This is very important because if the transfer of data on your loan payment history from your current loan servicer to the new loan servicer is not complete, the new loan officer may report the incorrect payment history.
DOCUMENT EVERYTHING! The end of three major federal student loan servicers should not cause panic. Be diligent in protecting yourself by documenting your loan payment history should any issues arise. There are still many unknowns out there, such as possible debt forgiveness, changes from within the DOE on how loan servicers are to manage student loans, and who the DOE will approve to take over servicing millions of borrower’s student loans. Should any issues arise, without sufficient documentation to challenge the loan servicer, you may be jeopardizing your loan forgiveness plan and your credit score. This also opens the door to the possibility of paying more on your loan than what is necessary – and no one wants that!
If you have any questions or concerns, you should always reach out directly to your loan servicer and discuss planning opportunities with your financial advisor. Looking for assistance in navigating this change? Feel free to reach out to either myself or one of my colleagues here at John G. Ullman & Associates.