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Protect Yourself Before Your Federal Student Loan Servicer Changes

Protect Yourself Before Your Federal Student Loan Servicer Changes
Credit: fizkes - Shutterstock

Earlier this month, the Department of Education released new details about its upcoming student loan servicer overhaul. The department first announced these sweeping changes in a June press release—including its contracts with five new student loan servicers.

The department—which has struggled with servicer accountability in the past—hopes to change things with a new, centralized NextGen platform. According to the press release, these five new companies will offer “enhanced customer support” to more than 68 million borrowers.

The five new companies won’t take over right away, though, according to the latest update. The department will continue working with its nine existing loan servicers; contracts with FedLoan Servicing, Great Lakes, Navient and Nelnet won’t end until December 2021, while CornerStone, Granite State, Edfinancial, MOHELA and OSLA Servicing have until March 2022.

“When the time comes to transition your account into the NextGen environment, you’ll receive emails, messaging on social media and a wide array of other communications about what to expect and how to continue to manage your account,” wrote Mark Brown, the chief operating officer of Federal Aid.

Protect yourself before these changes happen

While it may be over a year before these changes are implemented, you should be prepared—switching student loan servicers can be a messy process. In the past, student loan servicer changes have caused payments to be lost, surprise late fees and loan processing issues. Before the overhaul happens, Adam S. Minsky—a student loan attorney and senior Forbes contributor—recommends taking certain steps to protect yourself.

Download a complete record of your student loan payments with your current loan servicers, as records can be lost when transferring your loans to a new servicer. You should also gather copies of any communications you have had with your servicers—including emails and notes from phone calls. Also important: If you’re on track for Public Service Loan Forgiveness, take the time to certify your employment.

Once servicer changes happen, double-check your bank accounts for accurate payments. Don’t assume your previous automatic payment schedule will remain intact. You should also watch your credit reports—which now you have free weekly access to—to make sure there are no errors on it due to the actions of your previous loan servicer.