Two federal student loan service providers have announced plans to waive their government contracts at the end of 2021, and the US Department of Education will have to transfer loans to nearly 10 million borrowers to other service providers.
Pennsylvania Higher Education Support Agency (PHEAA), which acts as FedLoan Servicing, announced on July 9 that he will not renew his 12-year federal loan servicing contract expiring on December 14, 2021. Granite State Management & Resources, which is part of the non-profit network of the New Hampshire Higher Education Association Foundation (NHHEAF), will also waive the contract. to focus on managing private student loans, according to Press release July 19…
Experts fear that the move will cause confusion among borrowers of federal student loans, especially as it coincides with the resumption of student loan payments on October 1. Keep reading to see if this will affect your student loans and find out how you can prepare to transition to the new system. service staff.
If you are worried about keeping up with your student loan payments when your abstinence period comes to an end, consider refinancing your private student loans with Credible reduce monthly payments at low interest rates. This will help you pay off other debts on time, including your federal student loan debt.
Has your service center turned down student loans?
If your student loans are served by FedLoan Servicing or Granite State Management & Resources, then by the end of the year your loans will be transferred to new federal loan servicing staff. It will not affect your loan repayment plan such as interest rate, loan balance or monthly payments.
FedLoan service was recently sued for allegedly preventing government employees from forgiving or reducing their student loans under the Public Service Loan Forgiveness (PSLF) program. The service agent said federal loan programs “are becoming more complex and complex, and the cost of servicing those programs is skyrocketing.”
By buying private student loans, compare interest rates of several lenders on an online marketplace like Credible to get the lowest bid possible for your situation.
What happens if your loans get hurt
With the resumption of student loan payments in October and the transfer of millions of borrowers to new service centers around the same time, the Federal Student Aid Office (FSA) is working to reduce confusion among the changes so that borrowers do not default on their loans.
While the Department of Education has a plan for your federal student loans, it is important that you prepare your finances for the transitions this year. Here are a few things you should do before resuming your student loan payments:
- Make sure your contact information is up to date. Contact your loan agent and FSA to make sure they have your correct physical address, email address, and phone number so you don’t miss out on any important mail.
- Check if your account has automatic payments. If your federal student loans are set to direct debit through your bank account, then your first payment will be charged in October. Make sure you have enough money in your account to pay off your student loan.
- Enroll in an Income-Driven Repayment (IDR) plan or an abstinence program. If you cannot afford this first payment in October, check out the unemployment deferral or cut benefits at FSA website…
Finally, you may want to consider refinancing your private student loans, although interest rates have historically been low. This will help you pay off debt faster, lower your monthly payment, and save money on student debt interest.
One caveat: refinancing your federal loans is not advised as this will strip you of your eligibility for federal protections such as IDR plans and student loan forgiveness. Make sure your debt is transferred through a private lender before refinancing.
Contact a knowledgeable loan officer at Credible to discuss repayment options so you can decide if refinancing is right for you…
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