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CornerStone Education Loan Services was once a major federal student loan servicer. But in 2020, the company suddenly canceled its contract with the U.S. Department of Education, leaving roughly 1 million borrowers in limbo. If CornerStone used to be your student loan servicer, here’s what to expect.
What happened to CornerStone Education Loan Services?
The Department of Education doesn’t directly handle the management and repayment of federal student loans. Instead, it contracts that work out to loan servicing companies like Navient, Nelnet, Great Lakes and MOHELA, among others.
When your loan is disbursed, it automatically gets assigned to one of these servicers, which will manage your loans until they’re paid off.
CornerStone used to be one of the eight approved companies managing federal student loans. It’s managed by the Utah Higher Education Assistance Authority (UHEAA), although it serviced loans nationwide. CornerStone was originally contracted to service federal loans through 2022, but it ended its contract in October 2020 due to financial loss. Its website no longer exists, and all loans were transferred to FedLoan Servicing.
However, last year, FedLoan also announced that it will stop servicing federal student loans after December 2022.
What will happen to my CornerStone Education Loan Services loans?
If you were one of the 1 million borrowers with a CornerStone loan, your loan has been transferred to FedLoan Servicing, another federal student loan servicer.
FedLoan — run by the Pennsylvania Higher Education Assistance Agency — has also backed out of the student loan servicing industry. This means your loans will be transferred once again (if they haven’t already). They may end up at one of four servicers: MOHELA, Nelnet, Aidvantage or Edfinancial.
When your loans get transferred to another loan servicer, it’s at no cost to you, and all of your loan details will stay the same. You’ll still be able to track your loan information, manage repayment and possibly reap some extra benefits. For instance, your new servicer might have an autopay discount option available, saving you money on interest every month if you set it up.
You’ll know your loan is transferred when you get an email or a letter from your new servicer about the transfer. This letter will have instructions with any next steps you need to take, like completing an online registration and setting up payment information.
If you’re unsure which company is your loan servicer, you can check through the Federal Student Aid website or look at your credit reports. It’s smart to keep copies of your last few statements. That way, if anything seems amiss, you can get that sorted out with your new servicer.
Can I change my loan servicer?
You can’t usually change the loan servicer that’s been assigned to you, although there are a few exceptions. If you apply for a Direct Consolidation Loan in order to combine all of your existing federal loans, for instance, you can select a servicer to manage your new loan.
You can also change loan servicers when you refinance your student loans. Refinancing turns all your federal loans to private, giving you new loan terms and a new interest rate. However, refinancing your federal student loans means you lose all your federal benefits, like income-driven repayment, access to forgiveness programs and administrative forbearances. Once complete, you can’t go back. But it does give you a new student loan servicer.
Consolidating and refinancing are not the best options for everyone, so changing servicers may not be on the table. If you have complaints about your servicer, you can file them with the Consumer Financial Protection Bureau (CFPB) or your state attorney general’s office.
The bottom line
There’s nothing you can do to stop your federal student loans from being transferred to another servicer, as happened with CornerStone and then with FedLoan. But getting a new servicer shouldn’t be intimidating. The new company must honor the original terms of your student loans. That means your payments and balance won’t change at all and you will still have access to the same federal protections you did with your previous servicer.
The only thing you’ll need to do is create a new account with the new servicer and continue making payments as usual.