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If you have federal student loans, there’s a good chance your loan servicer canceled it this year.
Navient, one of the largest loan servicers in the US, announced this week that it will exit the federal student loan business and turn its borrowers over to Maximus, another federal loan servicer that focuses on delinquent loans. The transition will require Federal Student Aid (FSA) approval and will affect some six million borrowers.
Navient is the third lender to end its relationship with the government this year, after the Pennsylvania Higher Education Assistance Agency (also known as FedLoan) and Granite State.
That means the Department of Education will have to move more than 15 million borrowers, nearly a third of all borrowers, to new servicers, a process that can cause confusion and could lead to errors, according to Robert Farrington, founder and CEO of The College Investor. , a site that provides advice on student loans.
“There’s going to be a lot of chaos,” says Farrington.
On top of that, 40 million student loan borrowers who have taken advantage of pandemic-related forbearance will start paying back on January 30, 2022.
Use these extra months of student loan forbearance to prioritize other aspects of your finances, like building an emergency fund (if you haven’t already) or paying off more pressing high-interest debt.
Most people “probably haven’t looked at their student loans in 20 months, so you have to get people to re-commit to the fact that they have student loans,” says Farrington. “Combine that with the fact that all of your previous information, contacts, website logins, and letters received in the mail are from a company that will no longer be your future company.”
What to do if your student loan servicer changes
There’s no need to panic if your student loan servicer is changing. Take this opportunity to review your student loans and prepare for repayment. Before your loan is transferred to a new servicer, you must do the following:
Track your loans
If the Department of Education transfers your loan from one servicer to another, you must receive notice from both your current servicer and the new servicer. But if you’re like most borrowers, you probably haven’t made student loan payments in almost two years, so it doesn’t hurt to check who your current loan servicer is and who will be your new one. If you’re not sure who your loan servicer is, log on to StudentAid.gov to find out. You can also find out by contacting the Federal Student Aid Information Center (FSAIC) by phone, live chat, or email.
“Keep track of your loans, know how much you owe, and update your website login,” says Farrington. “If you log in and see that you have a loan with a company you don’t recognize, search for that company.
Update your contact information
Make sure your personal information is up to date on your account, including your home address, phone number, and email. That way, you can stay informed about your loans and your new loan servicer’s forbearance period.
Keep records of your student loan information
Farrington recommends saving or printing a copy of all your loan information, including your payment history, current loan balances, interest rates, and monthly statements. Having a record of your loans can help ensure they are accurate once they are transferred to a new servicer.
“Hopefully you never need it, but it’s really nice to have that history of information if things don’t transition smoothly somehow,” says Farrington. “Having your own paper trail will help a lot.”
It may also help you know who to contact if you are interested in exploring forgiveness, requesting a deferment, consolidating, or signing up for an alternative payment plan.
Start putting together a plan now
You still have four months until the student loan forbearance period ends, but experts recommend taking advantage of this extra time to get ahead with your finances and make a plan to resume payments next year.
That sounds different for everyone, but maybe for you, that means cutting or readjusting certain areas of spending now to make room in your budget in 2022. It could mean researching payment plans or starting a spreadsheet to help you map out your spending strategy. pay. The US Department of Education said the latest extension is the “final” extension, so it’s best to get ahead of the curve while you can.
“Your first payment isn’t due until February,” says Farrington. “But for January, you need to make sure you’re on the right payment plan, know where you’re sending your payments, and maybe set up that online bill pay so you know you’re up to date.”