Student loan servicer Navient wants to exit the federal debt servicing business, The company announced in a press release on Tuesday. The decision will affect the approximately 6 million student loan borrowers whose loans will be assigned to a new servicer.
Navient submitted a request to transfer its federal loan service agreement to another student loan company, Maximus. Transfer is subject to approval by the Office of Federal Student Aid (FSA), which is expected to be finalized in the third quarter of 2021.
Navient, formerly part of Sally Mae, was once the largest student loan servicer in the country. company has been involved in several lawsuits Alleging that willful and willful borrowers overpaid on their student loans.
Navient is just the latest student loan servicer to eliminate its federal obligations. Recently, two other big sevadars – FedLoan Servicing and Granite State Management and Resources announced that they were not renewing their federal contracts, which would affect 10 million borrowers.
If your student loan servicer is closing, your loans will automatically be reassigned to a new servicer with the same repayment terms. But if you are unhappy with your student loan repayment plan, consider your options like an income-driven repayment plan, student loan Forgiveness and private student loan refinancing.
You can do this Compare Student Loan Refinance Offers Without affecting your credit score on Credible.
New lawsuits complicate federal service
Consumer Financial Protection Bureau (CFPB) sued Navient in 2017 To “systematically and illegally” mislead borrowers about their loan repayments, including defrauding borrowers of their rights to lower monthly payments and student loan forgiveness.
“For years, Navient failed consumers who trusted the company to give them a fair chance to pay off their student loans,” Richard Cordrey, former CFPB director, said in a press release at the time of the lawsuit. “At every stage of repayment, Navient opts to shortcut and deceive consumers to save on operating costs.
In addition to the CFPB lawsuit, Navient has been sued by several states, including Illinoishandjob new Jerseyhandjob Pennsylvania And Washington. The lawsuits allege that Navient misled and abused student loan borrowers at every stage of the process, from loan origination to collecting defaulted student loans.
Navient dismissed the allegations that it was involved in misconduct, instead blaming state-specific rules on servicing federal student loans.
What to do if your student loan servicer is changing
The FSA is working on converting affected borrowers to new student loan servicers before federal student loan payments resume in February 2022. If your student loans are serviced by Navient, FedLoan Servicing or Granite State Management, you do not need to take any action on your student loans.
While the FSA will handle the transfer of your loans, there are a few things you can do. Prepare to resume payment Under a new student loan servicer.
Make sure your contact information is up to date
The Department of Education is working on several email and social media campaigns to notify borrowers over the next few months as student loan servicers change and monthly payments resume. Make sure your contact information on the FSA website is correct So that you don’t miss any important communication about the status of your federal loans.
Enroll in an income-driven repayment plan
When your monthly payments resume in February 2022, they will be the same as they were before the COVID-19 administrative forbearance began in March 2020. If you don’t think you’ll be able to afford your student loan payments, be proactive by enrolling in an income-driven repayment plan (IDR).
Depending on the type of federal loan you have, an income-driven repayment plan can limit your monthly loan payments to 10-20% of your disposable income. You can learn more about IDR plans on the FSA website.
Refinance your private student loan at a lower rate
Student loan refinancing is when you take out a new loan to pay off your current student loan with new terms such as a lower interest rate. Refinancing may be able to help you reduce your monthly paymentPay off your loans faster and save money on interest over time.
well qualified borrower Refinanced your student loans for a longer period For example, OnCredible was able to deduct more than $250 from their monthly payments. those who Refinance for a short term loan Was able to pay off his loans 41 months faster and saved about $17,000 in the process.
How to decide whether you should refinance your student loans
While refinancing can help you lock in a lower student loan rate, it doesn’t. Suitable for all. refinancing your federal loans A personal loan, for example, would make you ineligible for federal benefits such as income-driven repayment plans, administrative forbearance and student loan forgiveness programs.
If you have private student loans, you have nothing to lose by refinancing at a lower interest rate. student loan lender generally do not charge refinance fees, which makes it possible to take advantage of lower student loan interest rates without adding to the cost of borrowing.
To find out if refinancing is right for you, use Credible’s Student Loan Refinance Calculator.
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