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You may be getting a new student loan servicer by the end of this year.
Here’s what you need to know.
Student Loans
There’s a major announcement today that could impact your student loans beginning next year, and it relates to one of the nation’s leading student loan servicers:
- As first reported by Michael Stratford of Politico, FedLoan Servicing will not renew its 12-year-old contract with the U.S. Department of Education to service federal student loans.
- FedLoan Servicing, also known as the Pennsylvania Higher Education Assistance Agency (PHEAA), services student loans for approximately 8.5 million student loan borrowers, which represents about 20% of all federal student loan borrowers.
- Importantly, FedLoan Servicing is the sole student loan servicer that services federal student loans for the Public Service Loan Forgiveness program, which helps student loan borrowers who work for a qualified public service or non-profit employer get student loan cancellation.
- FedLoan Servicing’s current contract will expire December 14, 2021.
- Student loan servicers help student loan borrowers manage their student loan payments, answer questions about student loans, and help with student loan repayment.
- Whether your student loan servicer is FedLoan Servicing or another student loan servicer, you can still contact your student loan servicer during the Covid-19 pandemic at any time.
What this means for your student loans
If FedLoan Servicing is your current student loan servicer, then you can expect to have a new student loan servicer in December. This is particularly important for any student loan borrower who is pursuing public service loan forgiveness, a program that has been plagued for years with 2% or less approval rates, which has prevented thousands of student loan borrowers from getting student loan cancellation. Democrats have proposed 5 ways to change student loan cancellation. The Biden administration is focused on helping more student loan borrowers get student loan cancellation under existing student loan programs, and also creating a simpler and more transparent student loan repayment system. This includes more accountability for student loan servicers and oversight of for-profit colleges, among other initiatives. These recent student loan updates have some people asking: Is this a game changer for student loan cancellation? The U.S. Department of Education has not announced which student loan servicer will take over servicing for existing federal student loans. Student loan borrowers should continue to make student loan payments, if applicable, in the normal course. Currently, through September 30, 2021, federal student loan payments, including for the Public Service Loan Forgiveness program, are not required due to temporary student loan forbearance. If FedLoan Servicing is not your student loan servicer (which is the case for most student loan borrowers), there is no other indication that your current student loan servicer will change.
Although federal student loan payments are paused, there’s no guarantee that this student loan relief will be extended. Therefore, now is a good time to revisit your student loans and student loan repayment strategy. Where should you start? Here are some popular options to save money:
