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Earlier this month, the Department of Education shared new details regarding its upcoming overhaul of federal student loan servicers. These sweeping changes, first disclosed in a June press release, include partnerships with five new servicers. The department, which has previously faced challenges with servicer accountability, is aiming to improve the system through a new, centralized NextGen platform. The new servicers will be providing enhanced customer support to over 68 million borrowers, according to the announcement.
However, the new servicers won’t assume control immediately. The Department of Education will continue collaborating with its existing nine servicers. Contracts with FedLoan Servicing, Great Lakes, Navient, and Nelnet will remain in place until December 2021, while CornerStone, Granite State, Edfinancial, MOHELA, and OSLA Servicing will continue their roles until March 2022.
Mark Brown, Chief Operating Officer of Federal Aid, stated: “When the time comes to transition your account into the NextGen environment, you will receive email notifications, social media messages, and various other communications to guide you through the process and explain how to manage your account moving forward.”
Prepare for Upcoming Changes to Safeguard Yourself
Though these changes may not take effect for over a year, it’s essential to be ready—switching student loan servicers can be a chaotic experience. Historically, transitions between servicers have led to lost payments, unexpected late fees, and loan processing complications. Before the changes take place, Adam S. Minsky, a student loan attorney and senior Forbes contributor, advises taking specific steps to protect yourself.
It’s crucial to download a full record of your student loan payments from your current servicer, as records can be lost during the transfer to a new servicer. Be sure to keep copies of any communications you’ve had with your servicers, such as emails and notes from phone conversations. Additionally, if you’re aiming for Public Service Loan Forgiveness, make sure to certify your employment promptly.
After the servicer changes, double-check your bank account to ensure payments are accurate. Don’t assume that your previous automatic payment schedule will stay the same. Also, monitor your credit reports, which you now have free weekly access to, to catch any potential errors caused by your former loan servicer’s actions.
