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How To Switch Student Loan Servicers

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Monitor Your Credit Report

Student loan provider switch could affect millions of borrowers

Financial advisor R.J. Weiss of The Ways to Wealth says borrowers who are moving student loan servicers should keep an eye on their credit reports more often than usual. However, you should make sure you check reports from all three credit bureaus and not just one.

“It’s important to check all three because the reports are not always the same,” he says.

Weiss says you want to monitor your credit reports because mistakes can be made during the transfer process. For example, it’s not uncommon for one provider to report an unnecessary late payment or forget to remove the loan from your report in a timely fashion.

To monitor your credit reports, head to AnnualCreditReport.com, where you can check reports from all three bureaus for free.

How To Change Student Loan Servicers

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When you first get federal student loans, you cant choose your servicer the company contracted by the government to manage your loans. But you can change student loan servicers if you consolidate.

» MORE:What federal student loan servicing companies might not tell you

Theres no reason to make a change if youre fine with your current servicer. But you might want to switch if youre having trouble dealing with it, as many borrowers do.

If youre not sure who your loan servicer is, log in to StudentAid.gov and find out. You can also get in touch with all of the loan servicer contact centers by calling 1-800-4-FED-AID. The U.S. Department of Education assigns your servicer when your loan is first disbursed. The servicer is in charge of collecting and tracking payments you make. If you run into financial difficulty, it helps you enroll in a new repayment plan and grant requests for forbearance.

Two Options Instead Of Using Your Current Student Loan Service Company

Recapping what student loan servicing companies provide:

  • Manage and process payments, track accounts
  • Process forms, deferment, and Public Service requests
  • Service student loan borrowers
  • But what if youre not interested continuing to use your current student loan service provider?

    In the case you are ready to move on from your student loan provider for whatever reason, here are several options to getting out from under your student loan servicing company.

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    What Happens When You Change Servicers

    When you change loan servicers, the terms of the student loan do not change. However, the payment process may change:

    • The due date may change
    • The payment address may change
    • The auto-debit payment instructions may need to change

    There are also a few pitfalls when you change servicers by obtaining a Federal Direct Consolidation Loan.

    • Accrued but unpaid interest is capitalized at loan status changes, including consolidation
    • Consolidation resets the clock to zero on loan forgiveness, since loan forgiveness is provided on a per-loan basis, not a per-borrower basis, and consolidation results in a new loan
    • Other borrower benefits may be lost when a loan is consolidated, especially when a FFEL program loan is consolidated into a Federal Direct Consolidation Loan

    You Shouldn’t Notice Any Major Changes

    Help Employees With Their Student Loan Servicers

    While the transition may happen sooner than planned, ultimately, you should not notice any major changes with your student loans. Any plans or special payment methods you’re enrolled into should transfer over automatically. That noted, you’ll want to be on the lookout for key dates, such as when you can begin logging into your new loan servicing system, to double-check that everything transferred correctly.

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    Pslf Borrowers Should Fill Out The Employment Certification Form

    Kantowitz says borrowers who are pursuing Public Service Loan Forgiveness and whose loans are serviced by FedLoan Servicing should file an Employment Certification Form now to establish a record of the number of qualifying payments. If the borrower has been denied PSLF, he says they should file an appeal before the change in servicer.

    “Sometimes, records relating to a borrower’s payment history get lost when loans are transferred to a new loan servicer,” says Kantrowitz.

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    What Happens If You Opt To Stay With Your Student Loan Servicer

    If, after youve given the matter some thought, you decide to stay with your student loan servicer, give that servicer one last chance.

    Its advisable to try and sort out the issues you are experiencing with your student loan servicer before changing to a different one since there are several steps involved in switching, said Leslie Tayne, a New York City-based attorney who specializes in consumer debt and personal financial legal services.

    Before changing your loan servicer, file a complaint with the servicers customer service office. If the servicer is unresponsive or unwilling to work with you, you can file a complaint on the CFPBs website.

    You can also file a complaint or report an issue on the Federal Student Aid website, Tayne added.

    Sign Up For Public Service Loan Forgiveness

    Your Loan Servicer is Probably Changing in 2021 and It’ll Be Chaos

    If you have federal student loans and work for a qualifying nonprofit organization or government agency, you may qualify for PSLF. Under this program, your loans will be forgiven after you work for 10 years for an eligible employer while making 120 qualifying monthly payments. Payments made under an income-driven repayment plan, such as Income-Based Repayment, count toward PSLF.

    If you intend to pursue PSLF, youll have to send in an employer certification form . Once you submit the ECF, your federal loans will be transferred from your current loan servicer to FedLoan Servicing the federal loan servicer that manages PSLF applications.

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    Choose Your New Loan Servicer

    During the application process, theres an option to select a new loan servicer. Make your selection, completely fill out the rest of the application, and then submit it.

    Current federal student loan servicers include:

    • ECSI
    • Great Lakes Educational Loan Services
    • HESC / EdFinancial Services
    • Missouri Higher Education Loan Authority
    • Navient
    • OSLA

    Reasons To Change Your Student Loan Servicer

    A common reason that borrowers want to switch loan servicers is poor customer service. This may include having trouble reaching a representative or receiving incorrect or confusing information.

    But student loan expert Mark Kantrowitz, author of How to Appeal for More College Financial Aid, says that borrowers usually wont solve their problems by changing providers.

    The loan servicers have similar performance, and borrower complaints may have more to do with the design of the loan program and the limits on the servicers authority, as opposed to the servicer being mean or incompetent, he says.

    Still, if youve had repeatedly bad experiences with your servicer and are considering consolidating or refinancing your loans anyway, switching servicers may not be a bad idea.

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    Additional Ways Your Student Loan Servicer Could Change

    While consolidation and refinancing are two primary ways you can switch student loan servicers, there are a few other reasons your student loan servicer could change. In these situations, however, you wont get to choose your servicer, but rather will be assigned one.

    The Department of Education transferred your loans

    While youre paying back your loans, the Department of Education might transfer them from one loan servicer to another. It will notify you of a change in servicer so you know where to send your payments.

    Make sure your loan accounts have your most up-to-date contact information and mailing address so you dont miss this important communication. And sign into your online accounts every once in a while to double check that youre making on-time payments to the right servicer.

    Youre applying for Public Service Loan Forgiveness

    If youre pursuing the Public Service Loan Forgiveness program, your loan servicer could change. PSLF is a federal program that forgives loans for public servants after 10 years of service.

    FedLoan Servicing is the only servicer that currently manages PSLF applications, meaning your loans will be placed under its control if you are accepted into the program.

    This may soon change, however, so its worth checking the relevant page on the governments official StudentAid.gov website to see if you will be moved to a new servicer.

    Youre pursuing Total and Permanent Disability discharge

    What Should I Do If My Student Loan Servicer Changes

    How to Change Student Loan Servicers

    As a borrower, you dont need to do too much if your loan servicer changes. You will simply create an online account with the new loan servicer. This will allow you to set up auto draft or bill pay with the new loan servicer. It will also allow you to keep track of your loans.And, of course, you will need to send your monthly payment to the new loan servicer. The easiest way to do this will be through the loan servicers online portal. However, you can also send checks to the new loan servicer once it confirms your account.

    However, we strongly recommend that you have accurate records of your loans prior to any switch. This means having copies of your statements and loan balances – just to make sure your records are accurate after the switch!

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    What Does A New Student Loan Servicer Mean

    While the Department of Education funds your federal student loans, it issues contracts with companies to manage the repayment of those debts. Your loan servicer facilitates your monthly payments, tracks your repayment progress, helps you enroll in a repayment program and can pause your payments with deferment or forbearance.

    Its not all that unusual for your loan to change hands, especially if youre repaying debts for a decade or more. When your loan moves to a new servicer, you shouldnt have to do much. Your old servicer will work with your new one to transfer your account. Once the switch is complete, youll simply start making your payments to the new company. But for the federal student loan system, its not a process that has always gone smoothly.

    A 2020 report from the Student Borrower Protection Center detailed issues with the transfer of federal loans when Affiliated Computer Services closed their servicing contract. When 35 million loans were moved to other servicers in 2013, some borrowers werent properly notified of the change, while other accounts were filled with errors. In some cases, ACS continued to charge borrowers after the transfer was complete, resulting in duplicate payments.

    All of these actions have caused loan servicers to implement many changes to how loans are managed. That doesnt mean that the upcoming servicer transfers will have widespread problems, but its wise to pay attention and make sure your account is transferred without issue.

    Us Department Of Education Increases Servicer Performance Transparency And Accountability Before Loan Payments Restart

    Contact:

    The U.S. Department of Education today announced stronger standards for performance, transparency, and accountability for its student loan servicers aimed at protecting borrowers. Six loan servicing companies Great Lakes, HESC/Edfinancial, MOHELA, Navient, Nelnet, and OSLA Servicing will be held to these higher standards starting early next year.

    The new contract terms give the Departments Federal Student Aid office greater ability to monitor and address servicing issues as they arise require compliance with federal, state, and local laws relating to loan servicing and hold servicers accountable for their performance, including withholding new loans and associated revenue for poor performance. These changes will be critical as FSA works with student loan servicers to implement the Biden-Harris Administrations commitment to reform student loan servicing and ensure a smooth transition for borrowers out of the student loan pause ending on Jan. 31, 2022.

    FSA is raising the bar for the level of service student loan borrowers will receive, said FSA Chief Operating Officer Richard Cordray. Our actions come at a critical time as we help borrowers prepare for loan payments to resume early next year. The great work done by our negotiating team here enables us to ensure that loan servicers meet the tougher standards or face consequences.

    Increased Performance Standards to Better Serve Borrowers

    Increased Accountability to Protect Borrowers

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    Federal Student Loan Servicers Changing For Millions Of Borrowers

    Federal student loan servicers changing for millions

    FOX 26 Consumer Reporter Heather Sullivan has some smart sense for those who are paying services to handle their student loans.

    Houston – When the pause on federal student loan payments ends January 31, millions of borrowers will discover their loan servicing company has changed. Loan servicers are the company you pay that manages your account.

    The Consumer Financial Protect Bureau is sounding the alarm that this transition could lead to missed or delayed payments. So here’s what you need to know.

    “Reach out to your servicer today, and I caution you dont wait until January 29 to do this,” said Scott Buchanan, Executive Director of the Student Loan Servicing Alliance.

    The time is now to act on your federal student loans.

    FedLoan Servicing and Granite State have announced they will not service these loans next year.

    The U.S. Department of Education is creating Next Gen, the Next Generation Financial Services Environment, with a centralized loan servicing platform, and transitioning from nine loan servicers to these five:

    Edfinancial Sevices, LLC.Missouri Higher Education Loan Authority .Texas Guaranteed Student Loan Corp.

    “Some borrowers will be transitioning to a new servicer over the coming months,” said Buchanan.

    That means before the new company takes over your account, you should make sure your contact and banking information is current.

    Why Borrowers Might Consider Changing Loan Servicers

    Proposal to change federal student loan programs

    There are several legitimate reasons why borrowers might want to switch to another loan servicer. Possible reasons include:

    • Poor customer service
    • You want to consolidate your loans
    • You want to pursue PSLF

    Switching to a new loan servicer may not solve the problem, but its an option if you are unhappy with your current situation. Weve ranked all federal loan servicers based on complaints received by the Consumer Financial Protection Bureau .

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    Why Maximus Is Replacing Navient

    Maximus is a federal contractor based outside Washington, D.C. Itâs better known for its massive health care, human service, and tech contracts with the federal government. The company helps operate the Centers for Medicare & Medicaid Services, and in May 2021 it landed a potential $951 million contract to support the Centers for Disease Control and Preventionâs COVID-19 national surge support and vaccine assistance hotline.

    While Maximus has been more focused on the health care industry recently, the company already had close ties to the Education Department before the Navient transaction. Maximus has worked on contracts for the departmentâs debt management and collections system and business operations.

    âThis contract enables Maximus to apply our deep understanding of the needs of student borrowers and our industry-leading customer service to assist FSA in successfully serving millions of student loan borrowers,â Teresa Weipert, general manager for the U.S. federal services segment of Maximus, said in a .

    Plus, it appears as if the FSA trusts Maximus more than the previous student loan servicer Navient had a questionable past with federal student loan servicing. In December 2020, nine borrowers filed a class-action lawsuit alleging that Navient had fraudulently misallocated payments to extend the life of possibly millions of federal student loans. In , a federal judge in New Jersey said the borrowers could pursue the lawsuit.

    My Loan Was Transferred Again Why

    From time to time, the Department’s contracts change with servicers and the loans need to be transferred to another servicer. Borrowers impacted by such a transfer should receive notification by email and letter prior to and after the transfer takes place. Borrowers should re-establish access to online account services with the new servicer.

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    Check If You Qualify For Loan Forgiveness

    Jason DiLorenzo, founder and CEO of PSLFJobs, an employer consultant and jobs platform, emphasizes that borrowers who are interested in income-based student loan forgiveness or the public service loan forgiveness program should take stock of how much progress they have made.

    “If you’re pursuing any kind of federal loan forgiveness, even if it’s taking a snapshot from your phone, do it,” he says. “You want to keep a record of your student loan history.”

    For those using an income-based repayment plan, DiLorenzo “would advise people to wait until your loan servicer asks you to recertify your income. Because you’re either paying zero or you’re paying based on an older income. And assuming that people are making more money than they have in past years, you want that lag, because then your payments are lower.”

    Borrowers who are pursuing PSLF should document how many payments they have made towards the required 120 monthly payments and complete an employment certification form, which confirms that a borrower’s workplace qualifies them for public service loan forgiveness, as soon as possible.

    This is the best way for borrowers to make sure their loans remain in the public service loan forgiveness program when they are transferred, says DiLorenzo.

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