Your federal student loan servicing company is going to change. This will impact everyone, but should PSLF dreamers be particularly concerned? Yes.
The U.S. Department of Education’s office of Federal Student Aid just announced that it was not renewing loan servicing contracts for a number of companies. The Department also announced that it was signing contracts with five new companies that will effectively take over federal student loan servicing.
This could be BIG, and not in a good way for borrowers, including PSLF applicants.
Who’s In and Who’s Out?
The five new companies that will be taking over federal student loan servicing are EdFinancial Services, F.H. Cann & Associates LLC, MAXIMUS Federal Services Inc., Missouri Higher Education Loan Authority (MOHELA), and Texas Guaranteed Student Loan Corporation (Trellis Company).
If your loans are serviced by companies such as Nelnet, Great Lakes, Navient, and FedLoan Servicing, your loans are about to me moved to one of the five companies listed above for serviving.
Why should I care who is servicing my federal loan?
We have all heard horror stories about students having their loans moved from one servicing company to another. Payments go missing, records can’t be located, PSLF loan forgiveness is delayed or denied. It’s a mess and it comes at a financial cost to public interest attorneys.
How will these new companies do? Maybe better? But maybe not.
Can you trust the companies currently servicing your loans to properly transfer your loans? After all, they have not been perfect, and not for nothing, but they are not happy to be getting the boot! Think they will maker this a smooth and easy transition for your? Hey, that would be great, but again, this is your money.
Do you trust that all of your records will be carefully and accurately transferred to the new federal loan servicing company? Do you trust that the new companies will accurately input that data into their systems?
If I were you, I wouldn’t trust any federal student loan servicing company. Especially given what a mess the PSLF program has been sand all the money (your money!) that is at stake!
What should I do before my federal student loan servicing company changes?
There is not much you can do to avoid the chaos of having your loans transferred to a new federal loan servicing company. The change is going to happen and chaos may ensue. However, because these changes will not go into effect until December 2020, possibly December 2021 if extensions are granted, you have some time to take steps to protect yourself, and your money.
First, submit a public service loan forgiveness employment certification form, as soon as possible, with your current provider. Make sure this is done for every qualifying employer you have had! (See my prior post – 3 Public Service Loan Forgiveness Pitfalls and How to Avoid Them). Once you receive the certification form back with the qualifying number of payments, scan it and save the paper copy.
Don’t have a scanner? Invest $60-$70 in a no frills Canon CanoScan Lide 300 Scanner
Second, download and print proof from your bank of every payment you have ever made to your prior and current federal student loan servicing company.
(I realized from a FB comment that not everyone has a printer! I bought this one when we started working from home. It’s cheap(ish), but it does the job!
I say print AND have an electronic copy because it is always good to have a backup! What if your PC dies or you lose your USB? When we are talking $100K and more in loans, having that old school paper backup could save you!
Third, download and print proof of every email or website message you have every exchanged with your federal student loan service company .
Fourth, request fro your federal student loan servicing company a detailed list of every payment you have every made. Scan it and save the paper copy.
By protecting yourself with meticulous record keeping, your chances of success when applying for PSLF loan forgiveness will be greatly increased. Good luck and let me know if you have any questions.
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