When federal student loan bills restart in September, millions of borrowers could be making their payments to a company they’ve never heard of.
During the pause of more than three years on payments, several of the lenders that managed the debt for the government stopped doing so. Those include Navient, the Pennsylvania Higher Education Assistance Agency (also known as FedLoan) and Granite State.
“I’ve heard that almost half of borrowers will have a new servicer when repayment restarts because of servicers having dropped out,” said higher education expert Mark Kantrowitz.
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The Consumer Financial Protection Bureau, meanwhile, estimates that 4 in 10 student loan borrowers will resume their bills with a new servicer.
Here’s what to know about the changes.
How do I know if I have a different servicer?
Borrowers who are being transferred to a different servicer should receive alerts via email, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.
These notices will explain any steps you’ll need to take, he said, and include information on your new servicer.
Kantrowitz has been tracking the servicing changes.
Borrowers previously with FedLoan should be transferred to MOHELA, or the Missouri Higher Education Loan Authority, he said.
Those who were serviced by Granite State will now be with EdFinancial Services. Accounts with Great Lakes Higher Education, Kantrowitz said, should be managed by Nelnet going forward.
And Navient’s borrowers will be moved to Maximus Federal Services/Aidvantage.
Borrowers can check who their new servicer is by logging in to StudentAid.gov., Kantrowitz said.
Do I need to do anything during the changes?
Borrowers shouldn’t have to do much during the servicer swap, Buchanan said.
Some will need to create an updated online account with their new company. “But the communications they received would have told them if they needed to take that step,” he added.
If you were enrolled in automatic payments with your servicer, which usually leads to a small discount on your interest rate, you may need to reenroll, Kantrowitz said.
You’ll also want to make sure your new servicer has your latest contact information, he said, as these details might have changed during the Covid pandemic.
Also, Kantrowitz said, “whenever there is a change of loan servicer, there can be problems transferring borrower data. Borrowers should be prepared for the possibility of glitches.”
When will my first payment be due?
The pause on federal student loan payments is slated to finally conclude within months. The Biden administration is preparing borrowers for their payments to resume by September.
Your due date will be at least 21 days after you’re sent a loan statement, Kantrowitz said.
“This may mean the earliest due date is Sept. 21,” he said.