By Owen Daugherty, NASFAA Staff Reporter
Borrowers who are serviced by two major student loan servicers who recently announced they will no longer operate as federal student loan servicers now know who will be handling their accounts next year.
The Office of Federal Student Aid (FSA) provided updates on federal loan servicers contracts last week, posting that some groups of borrowers who were under the Pennsylvania Higher Education Assistance Agency (PHEAA), which operates as FedLoan Servicing, will soon be transferred to MOHELA. Additionally, FSA said it has begun transferring borrowers serviced by Granite State to Edfinancial, and all transfers are expected to be completed before the end of the year.
The updates bring some clarity to the federal student loan servicing landscape amid an unprecedented shake up in recent months that meant as many as 16 million borrowers could have a new servicer at the beginning of the year as student loan payments are set to resume after the lengthy pause due to the coronavirus pandemic.
FSA noted that borrowers should look for notices from the Department of Education, in addition to their old or new servicer, regarding the status of their accounts with pertinent information about the transfer.
Before the spate of servicer departures, many experts worried neither servicers or borrowers were prepared for payments to resume when the federal forbearance comes to an end Jan. 31, 2022.
Servicers are tasked with ensuring borrowers have clear information about loan repayment and the options available to them. With so much turnover in the servicer ranks, that task becomes all the more difficult.
In the span of mere weeks in July, both PHEAA and Granite State announced they wouldn’t seek to renew their contracts with ED when the current ones expire at the end of the year. Navient last month followed suit, bringing the total number of borrowers who will be under new servicers next year to roughly 16 million.
Publication Date: 10/5/2021