Major Student Loan Servicer Changes in 2022 [Plus, What to Do]

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Although the Department of Education lends money to students, the agency doesn't interact directly with those who receive it. Instead, the administrative burden of student loan debt is taken on by third-party loan servicers.

Loans can be transferred to a new servicer at any time by the U.S. Department of Education. 

And there are big changes on the way in 2022 for federal student loan borrowers.

Approximately 16 million people with federal student loans will have new loan servicers by the end of 2022.

Can I change student loan servicers? You can change student loan servicers if you’re unhappy with your current servicer. It’s easiest to do this by consolidating your student loans, but you can also change servicers by applying for the Public Service Loan Forgiveness program (PSLF).

Major changes to federal student loan servicers in 2022

A total of 9.8 million students (about 23% of the nation's 42.9 million borrowers) will have their student loan debts transferred to a new servicer in 2022.

These current federal government loan servicing contracts will end in December 2021: 

  • Great Lakes Educational Loan Services
  • Nelnet
  • Navient
  • FedLoan Servicing (PHEAA)

Five additional loan servicing companies will no longer hold federal student loan balances as of March 2022: 

  • Edfinancial Services, LLC
  • Granite State Management (GSMR)
  • MOHELA
  • Oklahoma Student Loan Authority (OSLA)

CornerStone, another servicer, ended its contract with the US Department of Education in late 2020 due to financial difficulties. CornerStone is run by the Utah Higher Education Assistance Authority (UHEAA).

In June 2021, five new service contracts were signed by the US Department of Education:

Edfinancial Services and MOHELA now service all federal student loans. Unless your student loans are held by one of those two companies, expect to switch servicers soon.

FedLoan borrowers are likely to see their student loan accounts transferred to MOHELA. This change was announced on October 4, 2021. 

Visit your account dashboard and scroll down to the "My Loan Servicers" area to find out who your loan servicer is. You can also call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.

What should you do when your student loan servicer changes?

Given the history of the student loan servicing industry, there may be bumps in the road when your current student loan servicer changes. 

Here’s what to do when your student loan servicer changes to make the process as painless as possible:

  • Continue to pay your bills. Student loan payments are set to resume at the end of January 2022. At that time, be sure to pay the total monthly amount due to your current loan servicer until you receive confirmation that your loans have been transferred.
  • Make any necessary changes to your contact information. Log into your existing servicer's website and ensure your contact information is up-to-date. Even if you're still in school, be sure your current servicer has accurate contact information for you. That way, you'll be notified when the transfer takes place and if you need to take specific actions.
  • Check your servicer's mail and emails. Both your current and new service providers will contact you if your loans are transferred. It's critical to carefully review each piece of correspondence they send so you don't miss anything crucial.
  • Keep a copy of your payment history. You can save all documents and statements from your loan servicer’s website as a PDF. Especially if you need proof of payments for a loan forgiveness program, keep all statements and payment records.
  • Set a reminder to set up an online account with your new servicer. When you have a transfer date, set a calendar reminder so you don't forget to open an account on your new servicer's website. Take that opportunity to check your contact information, new payment due dates, and make sure your servicer’s account status matches your own records.
  • Avoid scams at all costs. Never hand over your personal information unless you’re certain the person you’re talking to is truly involved with your student loans. The CFPB's fraud and scams page can help you learn how to recognize scammers.

How does a student loan servicer change impact my loan?

All payments you make will be credited to your new loan account with the new servicer during the transfer process. Your current loan terms will not change.

You should be able to view your loans online with a new account number and login method. Your new servicer’s welcome letter should communicate any substantial changes.

Will it affect my credit if I switch student loan servicers? No, student loan servicer changes should not impact your credit. There may be a period of time (typically, a few days) in which your loan “falls off” your credit report and is re-added under your new servicer.

Student loan servicer changes will not affect your loan terms, student loan repayment options, or debt forgiveness programs.

The coronavirus pandemic-related payment suspension and 0% interest benefits will continue. This deferment period will end on January 31, 2022, at which time you’ll need to have a plan for restarting your student loan payments.

Any time a federally-owned loan is transferred between servicers, the loan status remains the same. In other words, if your loans are in forbearance or deferment, that won’t change when the loan is transferred.

Potential problems from a student loan servicer change

In theory, changing your student loan servicer should be pretty straightforward. However, there are a few potential issues to address:

  • Re-enroll in autopay. If your monthly payments are deducted automatically from your bank account, you will need to re-enroll with your new servicer once the transfer is complete.
  • Don’t skip payments if your loan balance shows as $0 at first. Your loans haven't miraculously vanished just because your account reads “$0.” Unless you know you’ve made your last student loan payment, continue making payments. Contact your servicer if several days have passed and your loan balance hasn’t been updated or if you are unsure how much your monthly payment should be.
  • Be proactive about loan forgiveness. A servicer change is a data transfer, which means information can be lost in the process. This can create a major problem if you're enrolled in a loan forgiveness program like PSLF or an income-driven repayment plan. Check your new servicer’s website to ensure all of the information matches your saved data.

PSLF borrowers: Don’t forget to download your payment history

While a loan transfer technically shouldn’t impact your student loan payment records, the PSLF program is not known for being exceptionally reliable for some borrowers.

If you are applying for PSLF (including the limited opportunity PSLF waiver), you need to keep clean records of every student loan payment you make.

Save records of your entire student loan payment history in photo or PDF form before the end of 2021. It’s a good idea to back up your records to a cloud-based storage solution as an extra layer of security.

Fortunately, your student loan servicer change shouldn’t impact your National Student Loan Data System (NSLDS) record. The NSLDS (found at studentaid.gov) is how the US Department of Education tracks all student loan payments, regardless of individual servicer.

Public Service Loan Forgiveness (PSLF) is a student loan forgiveness program for those who work full-time for the federal government or a non-profit. Fedloan has been in charge of administering the program since its inception in 2007.

To be eligible for PSLF, you must make 120 qualifying payments toward your student loan balance while working for a non-profit organization or the federal government. 

Currently, the PSLF program is managed by FedLoan Servicing, a division of the Pennsylvania Higher Education Assistance Agency (PHEAA). This servicer has a fairly poor reputation when it comes to student loans — many borrowers claim they’ve been denied loan forgiveness because FedLoan undercounts payments.

FedLoan will continue servicing student loans through December 2022 to support the massive 2021 loan transfers, but it’s still unclear what company will take over managing PSLF.

Check out my mini-course for how to nail your application for the PSLF Limited Opportunity Waiver.

While your servicer is supposed to report all payment history to NSLDS, you can always use your own records as a backup if something goes wrong.

How to change student loan servicers

There are 7 circumstances in which you may change your student loan servicer or something you do might initiate a servicer change:

  • Federal student loan consolidation
  • Applying for Public Service Loan Forgiveness (PSLF)
  • Filling out an Employment Certification Form for any loan forgiveness program
  • Applying for a Total and Permanent Disability (TPD) discharge
  • Filing for student loan bankruptcy
  • Filing a complaint with the office of Federal Student Aid (FSA)
  • Contacting a federal or state ombudsman to complain about problems with your student loans

In most of these cases, you can’t choose your new servicer, but your loans will be transferred to the servicer who is assigned to handle your type of situation.

If you want to change your federal student loan servicer, you can most easily do that by consolidating your loans. When you consolidate your federal loans into a Direct Consolidation Loan, you retain the benefits of federal loans but only have to make a single monthly payment.

You can also change your student loan servicer by applying for PSLF or another loan forgiveness program (like income-driven repayment). After filling out an Employment Certification Form (ECF), your loan will be moved to a servicer specializing in loan forgiveness.

The same goes for those filing for bankruptcy — even if your bankruptcy discharge is not approved, your loan will be moved to a servicer assigned to bankruptcy cases (currently ECMC).

Pro tip: Don’t opt for student loan refinancing just because you’re unhappy with your current servicer. Refinancing isn’t the same thing as federal loan consolidation.

You may be able to save money when you refinance your loans, but you’re also going to be working with a private lender. This means you get no federal benefits, like extensive forbearance and deferment options.

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If you need more personalized advice, don’t hesitate to schedule a free 10-minute call with me. I’ll point you in the right direction and ensure you’ve got the resources you need.


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