The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Information on this website may not be current. This website may contain links to other third-party websites. Such links are only for the convenience of the reader, user or browser; we do not recommend or endorse the contents of any third-party sites. Readers of this website should contact their attorney, accountant or credit counselor to obtain advice with respect to their particular situation. No reader, user, or browser of this site should act or not act on the basis of information on this site. Always seek personal legal, financial or credit advice for your relevant jurisdiction. Only your individual attorney or advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, contributors, contributing firms, or their respective employers.
Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.
In July, the Department of Education announced changes to its federal student loan servicer team, meaning borrowers may soon see their loans transferred to different companies.
The government contracts companies to manage student loan repayment. With the end of a contract with the Direct Loan Servicing Center (ACS), loans will be transferred to FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services, Nelnet and Sallie Mae during the next several months, a July 12 announcement said.
Four nonprofit servicers are also transferring loans. Accounts with COSTEP, EDGEucation Loans and EdManage will be transferred to MOHELA; KSA Servicing loans will be transferred to Aspire Resources Inc. The July 26 announcement says the loan-servicing platform used by the four nonprofit servicers will no longer be available.
Borrowers should receive notification of account transfers by email or letter.
Adam S. Minsky, a Boston lawyer specializing in student loan law, said he has had several people contact him as they receive transfer notification.
“They were contacted by a company they had never heard of before saying, We’re going to be your new loan servicer, please start paying us,” Minsky said. “Borrowers aren’t being notified until the transfer is just about to happen or has already happened. That can be really scary for borrowers.”
Though the Education Department hopes the transition will go smoothly, as stated in the announcements, those with student loans may want to take a proactive approach to the changes.
“People need to be careful and make sure everything transfers correctly,” said Heather Jarvis, a student loan expert. Jarvis said past transfers have yielded numerous reports of errors. “Whether or not their loans are transferred, people should periodically check that their loan servicers’ records reflect what they expect.”
Many services, like automatic payments and correspondence preferences, will not carry over to the new servicer. Loan status, such as forbearance and deferment, should not be interrupted by the transfer.
“Pay a little closer attention,” Jarvis said. “Double check there isn’t any opportunity for error.”
Borrowers can access their financial aid summary through nslds.ed.gov, and the loan details will list the servicer. Minsky recommended directly contacting the servicer with loan transfer questions.
“Many borrowers will experience nothing but the transfer, with no problems,” Minsky said. “Most of all, it’s just a pain for a lot of people.”
Image: Jupiterimages
August 26, 2020
Student Loans
August 4, 2020
Student Loans
July 31, 2020
Student Loans