A couple of months ago PHEAA (aka FedLoan Servicing aka myfedloan.org ) announced they were going to let their contract with Department of Education expire at the end of the year. Then, Granite State Management and Resources announced they, too, are not renewing their loan-servicing contract after December 2021. Recently, Navient made the announcement that they are exiting the federal student loan servicing system. This means more than 15 million borrowers, approximately 1/3 of all borrowers, will change servicers. Kind of sounds like a disaster waiting to happen, if you ask us. The Biden administration has indicated that this most recent pause on payments and interest is the final one, so don’t expect any help from them, either.
If Granite State, PHEAA/FedLoan Servicing, or Navient is your servicer, please monitor all correspondence to ensure you are kept up to date. You will be moved to a new servicer.
If you were with Granite State, you will be transferred to Ed Financial, another current servicer.
If you are with Navient, you will be moved to Maximus. This is still being approved by the Federal Student Aid (FSA), but it will likely go through.
Maximus currently handles much of the Department of Education’s defaulted federal student loan portfolio. So, they don’t really have the experience that we wish they did, so hope for the best but plan for the worst.
If you’re with PHEAA/FedLoan Servicing, you may be transferred to Mohela, another contracted loan servicer. However, the Department of Education has not been clear on how many of PHEAA’s accounts will be transferred there, and where the others may go.
To ensure that this process is done smoothly, we recommend downloading copies of anything available on your servicer’s portal, especially payment history. If you are on an income-driven repayment plan, like PAYE, REPAYE, and IBR, it is extremely important to know how many payments you have made if you are planning on taking the loans out to completion for forgiveness.
If you are working towards PSLF, this is also important. However, FedLoan Servicing is the servicer who administers the PSLF program, so you will likely not be impacted by this particular change, if you have been filling out the necessary paperwork. However, because FedLoan also did not renew their contract, there is that particular problem to pay attention to.
It also is probably a good idea to make sure that your contact information is up to date on your servicer’s website. Since it has been a couple of years since repayment, there may be some out of date stuff, and you want to ensure that your servicer knows how to contact you to let you know who you are being transferred to.
All in all, please pay attention to the craziness and do your best to have your own copies of everything. Prepare for the worst and hope for the best. We will of course continue to update you with any new information that becomes available.