We learned recently that two federal loan servicers, FedLoan Servicing and Granite State Management & Resources, would not renew their contracts with the Department of Education (ED). FedLoan Servicing has been the administrator of the Public Service Loan Forgiveness (PSLF) program so its exit is of particular concern. In addition, the two agencies currently serve approximately 10 million borrowers combined. The ED has already begun outreach to borrowers to let them know the change will not impact the terms and conditions of their loans and has offered the following advice:
- Make sure your address is correct with the current holder
- Download any correspondence, payment plan and current balance information from your account with your current servicer (particularly if you’re participating in the PSLF program)
- If using auto-debit to make payments, fill out a new authorization form once notified about your new servicer
The good news is the ED now has a little more time to find new servicers and complete the reassignment of loans. On August 6, the ED announced it would extend the ‘student loan pause’ until January 31, 2022. This pandemic relief program, which was originally part of the CARES Act, suspends both loan payments and interest accrual on federal loans only.
Additionally, the ED has taken the following steps to support borrowers facing hardship both related and unrelated to the pandemic.
- Approved $1.5 billion in Borrower Defense to Repayment claims
- Reinstated $1.3 billion in loan discharges for 41,000 borrowers who had previously been approved due to total and permanent disability
- Assisted 30,000 small business owners with student loans to receive funds from the Paycheck Protection Program
Follow the Higher Education Assistance Group blog for updates on student loan programs and other important issues in college financial aid. As always, you can contact us at firstname.lastname@example.org if you need additional support.