CornerStone Education Loan Services was once a major loan servicer for the U.S. Department of Education. But in 2020, the company suddenly canceled its contract with the Education Department, leaving 1 million borrowers in limbo. If you had a CornerStone loan, here’s what you can expect in the transfer.
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 and Great Lakes, among others. When you graduate, your loan gets assigned to one of these servicers that helps you manage your loans until you’ve repaid them.
CornerStone used to be one of a handful of 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.
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 — is currently contracted with the Department of Education through December 2021. This means you might encounter another loan transfer soon.
Even if you do 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 from your new servicer about the transfer. You’ll get a welcome letter detailing the actions 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 on your credit reports.
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 moves all your federal loans into a private one, giving you new loan terms and a new interest rate. Refinancing is done through private lenders, so once you refinance, you lose all your federal protections, like income-driven repayment and forbearance. Once it’s completed, you can’t go back. But it does give you a new student loan servicer.
All that said, 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
If you had loans serviced by CornerStone Education Loan Services in the past, you’ve already been issued a new loan servicer by this point, and your payments will continue as normal. You can also talk to your new loan servicer about your repayment options, income-driven repayment plans, forbearance or Public Service Loan Forgiveness. If you have questions about the transfer, you can always call your new servicer directly for more information.