Navient is the third company to exit federal student loan servicing this year. Here’s how your student loans are affected

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Navient is the third student loan servicer this year to exit its contract with the U.S. Department of Education, following the Pennsylvania Higher Education Assistance Agency (PHEAA) and Granite State Management and Resources.
Between the three servicers, roughly 16 million federal student loan borrowers will see their loans switch hands. Here’s what could happen to your federal servicer and when you can expect to see changes.
Millions of borrowers will have their loans transferred
By the end of 2021, Navient, PHEAA (also known as FedLoan Servicing) and Granite State will no longer be managing federal student loan products. During this transition, the loans will be transferred to a new servicer, but the details of the loans themselves will remain the same.
If you have loans serviced by Navient
Navient announced its intent to leave the student loan servicing business in late September. Navient will be moving its approximately 5.6 million borrowers over to Maximus.
Navient dealt with several lawsuits in recent years, with the U.S. Consumer Financial Protection Bureau alleging that Navient mishandled borrower accounts and steered borrowers toward forbearance instead of other options like income-driven repayment plans.
Federal Student Aid Chief Operating Officer Richard Cordray is optimistic about the transition. “We are confident this decision is in the best interest of the approximately 5.6 million federal student loan borrowers who will be serviced by Maximus and will provide the stability and high-quality service they deserve,” he said in a statement. “Our confidence in this novation is bolstered by the fact that Maximus will be held to the stronger standards for performance, transparency and accountability that FSA included in its recent servicer contract extensions.”
If you have loans serviced by Granite State Management and Resources
Granite State announced that it would be ending its federal contract effective Dec. 31, 2021, to focus on EDvestinU, its private student loan product. Owned by the New Hampshire Higher Education Association Foundation, the company will be transitioning 1.3 million borrowers over to Edfinancial Services by the end of the year.
Borrowers will be transferred to Edfinancial in groups, with all transfers completed by the end of the year. Granite State and the Department of Education will be sending out notices to affected borrowers.
Note that if you took out a private student loan through Granite State’s EDvestinU service, Granite State will still be your servicer; this change affects only federal student loan borrowers.
If you have loans serviced by PHEAA (FedLoan)
PHEAA, also known as FedLoan Servicing, announced in early July that it wouldn’t be renewing its contract with the Department of Education come Dec. 14, 2021. The company manages loans for 8.5 million borrowers.
PHEAA is currently the only company servicing Public Service Loan Forgiveness (PSLF) and has faced criticism for how it’s handled the PSLF approval process. Borrowers pursuing PSLF will need to pay particularly close attention to their transition to another servicer to ensure that all of their information transfers accurately and that future payments are correctly processed.
PHEAA and the Department of Education are in the process of transferring some groups of borrowers to MOHELA, but some borrowers may be transferred to a different servicer. Be on the lookout for notices from FedLoan or the Department of Education for more information about the transfer, which is expected to continue into next year.
The Education Department will continue to roll out servicing changes through 2023
These announcements come at a time of major change for federal servicers. The Department of Education is in the process of overhauling the federal student loan system through a platform called Next Generation Financial Services Environment (Next Gen) — the goal of which is to streamline and simplify federal servicing.
Cordray suggested during the 2021 Education Finance Conference that some servicers have decided to end their relationship with the Department of Education due to “new performance and accountability metrics” — a push to ensure that all borrowers are receiving quality service.
Along with adding enhanced features to the Federal Student Aid website, the initiative will also consolidate the number of federal servicers down to five. This means that, eventually, millions of borrowers will transition to one of five servicers:
- Edfinancial Services.
- H. Cann & Associates.
- Maximus Federal Services, Inc.
- Missouri Higher Education Loan Authority (MOHELA).
- Trellis Company.
Most of the existing companies recently received contract extensions through 2023, so you may not see your loans managed by one of these new companies for another few years.
What borrowers can expect
If your student loan is being transferred, the most important thing to do is keep an eye out for notices from the Department of Education or your current servicer. To ensure a smooth transition, take the time to update your contact information with your current servicer.
And remember, your loan amount, interest rate and repayment term will not change when you change servicers. You may need to reenroll in autopay or set up a new online account with your new servicer, but your loan details will stay the same.
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