10 million student loan borrowers are about to lose their student loan service provider – are you one of them?
Are you being dumped by your student loan manager?
You need to know – and what it means for your student loan.
Two major student loan providers announced last month that they would no longer serve federal student loans, which will affect nearly 10 million student loan borrowers. That means more than 20% of student loan borrowers will be affected by this important announcement. This also comes at a time when student loan cancellation has become a hot topic on Capitol Hill. Initially, FedLoan Servicing, also known as the Pennsylvania Higher Education Assistance Agency (PHEAA), announced it Not renewing its 12-year-old contract with the US Department of Education to service government student loans. PHEAA offers student loans to approximately 8.5 million student loan borrowers, accounting for about 20% of all federal student loan borrowers. Second, Granite State Management & Resources, which is part of the New Hampshire Higher Education Association Foundation’s (NHHEAF) nonprofit network, also announced that it will end its federal service contract to focus on servicing personal loans. This, of course, can lead to confusion, frustration, and perhaps panic among millions of student loan providers wondering about the possible implications. So let’s make it easy for you and break down the details so you don’t get caught by surprise.
Student Loan: Are You Getting a New Student Loan Service Provider?
Here are the answers to 11 important questions about your Student Loans, including how to determine if this important announcement affects you and what it means for your Student Loans:
1. How do you know if your student loan is affected?
If your state student loan service provider is either FedLoan Servicing (PHEAA) or Granite State Management & Resources, you might be affected. Approximately 10 million student loan borrowers will be affected as these student loan intermediaries cease servicing federal student loans after their contract with the U.S. Department of Education expires on December 31, 2021. If you are unsure who your student loan intermediary is, Student Loan Servicer is the company or institution that you pay your student loans to each month. If you’re still not sure, log into your Federal Student Aid (FSA) account and check out your student loan manager on the page FSA account dashboard. Alternatively, you can call Bundesstudienhilfe at 1-800-4-FED-AID (1-800-433-3243). These changes come at a time when some lawmakers, such as Senator Elizabeth Warren (D-MA), say student loan administrators were disrupting student loan borrowers during the Covid-19 pandemic when federal student loan payments were temporarily suspended Let down.
2. Will you be notified when your student loans are affected?
Yes, the US Department of Education will notify you in writing if your student loans are affected. It is important that you update your contact information on your FSA account and with your Student Loan Administrator to ensure that you are receiving all relevant communications regarding Student Loan borrowers.
3. When will you be notified if your student loans are affected?
You will be notified before December 31, 2021, the date the student loan servicing contracts will expire. The U.S. Department of Education has not announced an official date that it will contact the 10 million student loan borrowers that will be affected.
4. Which student loan service provider now looks after your student loans?
You will receive a new student loan servicer who will continue to look after your student loans without interruption. All student loans affected will be assigned to a new student loan service provider, although it has not yet been announced which student loan service provider will be assigned to you.
5. Will the interest rate on your student loan change?
The interest rate on your student loan does not change when you change student loan service providers. This is a major cause of confusion among student loan borrowers. If your Student Loan Manager ever changes (and this can happen more than once during the term of your Student Loan), please note that this will not change the terms of your Student Loan. When you borrowed your student loan, you signed a master’s note that contains the terms and conditions of your student loan. This master’s note will be recognized for the life of your student loan, even if you switch student loan providers. Federal student loans have a fixed interest rate, which means you will have the same interest rates for the life of your student loan. Some older federal student loans have floating rates, which means the interest rate can change over time. However, the interest rate for a variable interest student loan does not change as a direct result of changing the student loan service provider.
6. Will your student loan repayment schedule change?
Like your interest rate, your student loan repayment schedule won’t change when you get a new student loan service provider. For example, there are four main types of income-oriented repayment plans: IBR, PAYE, REPAYE, and ICR. For example, if your student loans are registered with your current student loan servicer at REPAYE, you can continue REPAYE with your new student loan servicer. That said, now is a good time to update your income, family size, and place of residence with your student loan service provider. Why? These factors can affect the size of your monthly student loan payment for an income-oriented repayment plan and help you get a lower student loan payment. You can also change your earnings-based repayment plan if another plan could help you get more student loans, for example.
7. Will this affect your student loan balance?
Like your interest rate and student loan payment plan, changing student loan broker will not affect your student loan balance. Your new student loan service provider will not change the size of your student loan balance when you get a new student loan service provider. This means that your student loan balance can change due to accrued interest, for example, but not directly due to a change of student loan service provider.
8. Will changing your student loan service provider affect your creditworthiness?
Switching your student loan service provider has no impact on your creditworthiness. When it comes to student loans, the best way to increase your credit score is to make the full student loan payment on time each month and not skip the student loan payments.
9. Will this change affect personal student loans?
These two announcements only affect federal student loans.
10. Should you stop paying student loans if you are concerned?
Don’t stop making student loan payments if your student loan service provider changes. Student loan borrowers should continue to make student loan payments as normal. Once you have been assigned a new student loan service provider and you are concerned, make sure your autopay information is updated with your new student loan service provider. This will help ensure a smooth transition and will help you avoid missed student loan payments or late fees.
11. How do you contact your student loan broker?
It’s easy to contact your student loan servicer. Now is a good time to move forward and check with your student loan broker to see if you are affected.
Student loan: next steps
If you have student loans and your student loan service provider is about to change before the end of the year, don’t worry. Yes, it’s inconvenient, but for the vast majority of student loan borrowers, the transition is expected to be relatively smooth. The U.S. Department of Education is focused on ensuring a seamless process for all affected student loan borrowers. The relief for student loans will also expire on September 30, 2021. For now, this hidden clue suggests that Biden is not extending the student loan facility. This means that federal student loan payments will resume from October 1 if no renewal is made. Therefore, it is possible for some student loan takers to restart the student loan payments with a student loan manager for October, November and December and then change January to a new student loan service provider.
If you have a student loan, make sure that you know all of the student loan repayment options. This is especially important if you get a new student loan service provider and your student loan repayment resumes on October 1st. Here are some popular options to save money on your student loans: