- Student loan company Granite State Management and Resources does not renew its loan servicing agreement after December.
- The Pennsylvania Higher Education Support Agency announced the same two weeks ago.
- About 10 million borrowers will now have to be transferred to new service companies before the suspension of payments ends.
- See more stories on the Insider business page…
After the Pennsylvania Higher Education Support Agency (PHEAA) announcing Two weeks ago, he did not renew his federal contract for servicing student loans, and another student loan company followed suit on Monday, bringing the total number of borrowers who will have to change service personnel to nearly 10 million.
Granite State Management and Resources (GSMR), a nonprofit student loan company that has 1.3 million borrower accounts, has notified the Department of Education that it will not seek an extension of its federal student loan service contract beyond December 31, Politico first reported… As the department plans to lift the pause in student loan payments in October, it will now be tasked with transferring these borrowers to new support staff in addition to the 8.5 million borrowers that were previously under PHEAA.
“The FSA (Federal Student Aid) and Granite State will work together to ensure a smooth transition of student loan borrowers to another serving loan,” said Richard Cordray, director of the FSA, which is part of the Department of Education, in a statement received by Insider. “Our roll-out plan will include early and frequent communication and clear guidance on what borrowers should expect.”
Cordray added that the FSA will enforce strict oversight of services to ensure that borrowers are “supported and not harmed during this transition.”
GSMR could not be reached for comment.
Over the past decade, student loan services have been under scrutiny by some lawmakers on Capitol Hill who want to protect borrowers. For example, following the announcement of PHEAA two weeks ago, Massachusetts Senator Elizabeth Warren said borrowers could “to sigh with a relief“Knowing that their loans will no longer be managed” by an organization that has robbed countless civil servants with debt relief. “
A PHEAA spokesman said in a statement that since the company accepted the terms of its federal service contract, loan programs have become “more and more complex and difficult, while the cost of servicing those programs has skyrocketed.”
And GSMR has come under scrutiny too. Since 2019, the Consumer Financial Protection Bureau (CFPB) – the agency Warren led for consumer protection – has been 56 complaints from borrowers about the company, with major complaints about inaccurate credit reporting, communication with the company, and attempts to recover outstanding debts.
Insider reported that communicating with service personnel is a big problem for borrowers who could pay off their debts but could not turn to the company that charged them the loans for help.
The Department of Education has yet to announce which companies will take over the GSMR borrowers’ accounts, and this event is likely to serve as a pretext for Democrats’ calls to extend the pause about student loan payments so that you have more time to deal with these administrative difficulties.
“No one is ready to resume payments on student loans.” – Warren. wrote on Twitter. “Not borrowers. Not student loan companies. And, of course, not our economy. We must extend the pause in payments and #CancelStudentDebt… “