Major education loan servicing changes are coming – here's how you can protect yourself

The U.S. Department of Education doesn't service federal student education loans itself but rather contracts with outside companies to handle procedure for collecting payments and providing customer service. That means they are able to determine when you should make student loan servicing changes.

In a current press release, the Department announced it's now contracted with five new companies that will take responsibility for servicing many of the outstanding student education loans borrowers owe. These businesses include EdFinancial Servicers; F.H. Cann & Associates LLC; MAXIMUS Federal Services Inc., Missouri Higher Education Loan Authority; and Texas Guaranteed Student Loan Corporation. The training Department has additionally severed ties with some existing loan servicers, including Great Lakes and Nelnet.

Millions of borrowers could be forced to change student loan servicers and deal with a different company when paying their loans, switching payment plans, or taking other steps to handle their repayment plans. As these federal student loan servicing changes work, borrowers will require to protect their interests. There are some key steps to ensure that:

  • Step 1: Obtain records from your existing servicer
  • Step 2: Make copies of communications with servicers
  • Step 3: Monitor your credit report
  • Step 4: Check your bank account online regularly

Step 1: Obtain records out of your existing servicer

It's vital that you be able to prove you've reliably made payments in your loans in case your payment record doesn't transfer over properly whenever your loan switches to a different servicer.

Proof of the payment history will help you enable you to get credit for each payment if you're trying to be eligible for a Public Service Loan Forgiveness or looking to get your remaining loan balance forgiven after making the requisite quantity of payments on an income-driven plan. But it may also be important in case your balance is incorrect or any mistakes is reported towards the credit bureaus.

Most loan servicers will help you to download your payment history directly from your account, so take action to achieve that quickly and keep the records inside a rut just in case there's ever any question about past payments you've made.

Step 2: Make copies of all communications with servicers

Records of any correspondence you've had with your current servicer typically won't be transferred to your new one. That means if there's a question later on about any facet of your payment history or your arrangement together with your servicer, the records may not be available.

To be sure you don't wind up with no proof you need if there's a dispute about some facet of the loan or payment history in the future, keep a copy of any communications from your current servicer. You may want to have both a tough copy and a digital one which means you don't risk losing important documents if you want them later.

Step 3: Monitor your credit report

When your education loan changes servicers, that increases the likelihood of misinformation being reported on your credit history during or following the transfer process. Since your credit rating can impact costs of borrowing for many years, impact job opportunities as well as the price of auto insurance, you can't take a risk of misinformation being posted on your report.

To make certain no information is reported in error, it's smart to look at your credit report at least every few weeks following the switch to a new loan servicer. If any mistakes is posted on your credit report, you can dispute it. Actually, this really is one example of the situation where your payment records and copies of the correspondence could come in handy.

Step 4: Check your account regularly

As you transition to paying your new loan servicer, it's possible payments may not be processed accurately. You might accidentally miss instructions on how to improve your payment process or pay through the deadline. To make certain that doesn't happen, create a web-based account together with your new loan servicer as quickly as possible and appearance in regularly.

By logging into your internet account at least once a month, you can check to see that the payment was properly processed and applied, that there are no surprise fees or unexpected costs, which you're receiving any discounts you were eligible for.

If you were set up to auto-pay balance before, odds are good you'll also need to set that track of your new servicer. This could take time, so it as being soon as possible to avoid missing a payment. You should note, however, your payment per month amount won't change whenever you switch servicers unless you opt to improve your repayment plan.

Can you avoid a change for your student loan servicer?

When you have federal student education loans, you don't have control over who your student loan servicer is • you have to settle for the servicer you're assigned by the Department of Education. When you can refinance having a private lender if you don't such as the servicer you're coping with, that would mean giving up substantial borrower benefits.

If you've private student education loans, however, you are able to refinance if you don't much like your loan provider or if you want to improve your loans. You won't give up key benefits should you refinance private loans as you'd simply vary from one private lender to a different.

You can click on PayPasser to get pre-qualified education loan refinancing rates without affecting your credit score.

It's also wise to use an online student loan refinancing calculator to obtain an idea of what your brand-new monthly obligations could be if you refinance the loan. This should help you determine if refinancing is right for you.


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