Two student loan managers end federal contracts, deserting 10 million borrowers – are you affected?
Almost 10 million borrowers will have their student loans reassigned to a new manager. See how you can ensure a smooth transition. (iStock)
Two federal student loan managers have announced plans to abandon their government contracts at the end of 2021, and the US Department of Education will need to reallocate loans from nearly 10 million borrowers to different managers.
The Pennsylvania Higher Education Assistance Agency (PHEAA), which operates as FedLoan Servicing, announced on July 9 that it will not extend its 12-year federal loan service contract expiring December 14, 2021. Granite State Management & Resources, which is part of the New Hampshire Higher Education Association Foundation (NHHEAF) nonprofit network, will also drop its contract in order to focus on administering private student loans, according to a July 19 press release.
Experts fear this transition could be confusing for federal student loan borrowers, especially since it coincides with the resumption of student loan payments on October 1. Read on to see if your student loans are affected and see how you can prepare for the transition to a new maintenance worker.
If you are worried about not paying off your student loans when the forbearance period ends, consider refinancing your private student loans on Credible to lower your monthly payments while interest rates are low. This can help you stay up to date on your other debts, including federal student loan debt.
DEMOCRATS WANT FEDERAL STUDENT LOANS TO BE WITHDRAWN UNTIL MARCH 2022
Have your student loans been abandoned by your service agent?
If your student loans are managed by FedLoan Servicing or Granite State Management & Resources, your loans will be reassigned to new federal loan managers by the end of the year. It won’t affect your loan repayment plan, like your interest rate, loan balance, or monthly payments.
FedLoan Servicing was recently prosecuted for allegedly preventing public servants from having their student loans canceled or reduced under the Public Service Loan Cancellation Program (PSLF). The duty officer said federal loan programs “have become increasingly complex and difficult as the cost of servicing these programs has increased dramatically.”
When shopping for private student loans, compare the interest rates of several lenders in an online marketplace like Credible to make sure you get the lowest possible rate for your situation.
98% OF REQUESTS FOR REMISSIONS TO THE PUBLIC SERVICE LOAN REMISSION PROGRAM REJECTED
What happens if your loans are impacted
With student loan repayments resuming in October and millions of borrowers shifting to new services around the same time, the Federal Student Aid (FSA) office is working to reduce the confusion in the middle. changes so that borrowers do not default on their loans.
“Our liquidation plan will include early and frequent communication and clear advice on what borrowers should expect.
Will BIDEN extend student loan forbearance again? THIS IS WHAT WE KNOW
While the Department of Education has a plan for your federal student loans, it’s important that you prepare your finances for the transitions that will take place this year. Here are a few things you should do before resuming student loan payments:
- Make sure your contact details are up to date. Contact your loan manager and the FSA to make sure they have your correct physical address, email address, and phone number to make sure you don’t miss any important communications by mail.
- Check if your account has automatic payments. If your federal student loans are set up by direct debit through your bank account, your first payment will be taken in October. Make sure there is enough money in your account to cover your student loan payment.
- Sign up for an income-based repayment plan (IDR) or hardship tolerance. If you can’t afford that first payment in October, check out your options for deferring unemployment or reducing payments on the FSA website.
Finally, you can consider refinancing your private student loans when interest rates are historically low. It can help you pay off your debt faster, lower your monthly payments, and save money on student debt interest.
One caveat: refinancing your federal loans is not recommended, as it will make you ineligible for federal protections such as IDR plans and student loan forgiveness. Make sure your debt goes through a private lender before refinancing.
Contact a knowledgeable loan officer at Credible to discuss your repayment options, so you can decide if refinancing is right for you.
STUDENT LOAN REFINANCING SAVES BORROWERS NEARLY $ 17K THANKS TO REDUCED INTEREST RATES
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