There’s a chance that your federal student loan servicer has dropped you this year if you have Federal Student Loans.
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Navient, the largest U.S. servicer, announced this week that it will be leaving the federal student loan industry and will pass its borrowers on to Maximus, another federal servicer who focuses on defaulted loans. The Federal Student Aid (FSA) will need to approve the transition, which will affect approximately six million borrowers.
After FedLoan and Granite State, Navient is now the third lender to terminate its relationship with the government.
This means that the Education Department will need to transfer more than 15,000,000 borrowers to new servicers, nearly a third of all borrowers. According to Robert Farrington (founder and CEO of The College Investor), a website that offers advice about student loans, this process can cause confusion and lead to errors.
What to do if your student loan servicer changes
If your student loan servicer changes, there’s no reason to panic. This is a chance to review your student loans and plan for repayment. You should complete the following before your loan transfers to a different servicer:
Get a track record of your loans
You should receive a notice from your existing servicer as well as your new servicer if the Department of Education moves your student loan from one servicer. If you are like most borrowers, it is likely that you have not made student loan payments for almost two years. Therefore, double-checking who your current servicer and who your new servicer will be is a good idea. Log in to StudentAid.gov if you aren’t sure who your loan servicer really is. Contact the Federal Student Aid Information Center by phone, chat, email, or live chat to find out.
Farrington says, “Track down your debts, find out what you owe and update your website login.” Logging in to your website and seeing that you have a loan with an unknown company is a sign that you need to find the company.
Make sure to update your contact information
Your personal information, including your email, phone number and home address, must be current. This will ensure that you are informed about your loans and the grace period provided by your loan servicer.
Keep track of your student loan information
Farrington suggests saving or printing a copy all of your loan information. This includes your payment history, current loan amounts, interest rates and monthly statements. A record of all your loans will help to ensure that they are accurate when transferred to a new servicer.
Farrington says, “I hope you never need it. But it’s really useful to have that track record if things don’t go smoothly.” “Having your own paper trail can go a long ways.”
This could help you identify the right person to contact if forgiveness is something you are interested in, or if consolidation, deferment, or enrollment in an alternative repayment program is something you want.
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Get started putting together a plan now
There are still four months before the student loan forgiveness period expires, but experts recommend that you take advantage of this extra time in order to make better financial decisions and plan for next year’s payments.
This will look different for everyone. But maybe it means that you need to cut back on certain areas of your spending now in order to make room for 2022. This could be as simple as researching your repayment options or creating a spreadsheet to help plan your repayment strategy. According to the U.S. Department of Education, the most recent extension is the “final”, so it’s important to stay ahead of the curve.
Farrington says that the first payment will not be due until February. Farrington says that you need to make sure that you are on the correct repayment plan and know where your payments are going. You might also want to set up online bill payment so you’re in control.