Dealing with an unresponsive or otherwise difficult loan manager can be frustrating. The good news is, you aren’t necessarily stuck with the repairman you’ve been assigned to. You can change student loan administrators through consolidation or refinancing, although both options come with some trade-offs.
Reasons to change your student loan manager
A common reason borrowers want to switch loan service providers is poor customer service. This may include difficulty reaching a representative or receiving incorrect or confusing information.
But student loan expert Mark Kantrowitz, author of How to Appeal for More College Financial Aid, says borrowers typically won’t solve their problems by switching providers.
“Loan managers perform similarly, and borrower complaints may have more to do with the design of the loan program and the limits of the manager’s authority, as opposed to whether the manager is mean or incompetent,” he said.
However, if you’ve had bad experiences with your provider on a number of occasions and are considering consolidating or refinancing your loans anyway, switching providers might not be a bad idea.
How to change student loan officers
There are only a few different ways to change your student loan officer.
Direct loan consolidation
Borrowers who are dissatisfied with their federal lending agency but wish to maintain their federal student loan status can consolidate their federal loans into a direct consolidation loan. When you consolidate through the official federal program, you will have the option of choosing a loan manager.
Your current options are:
- OSLA interview.
- HESC / EdfinanciÃ¨re.
- Great Lakes Student Loan Services.
The downside to consolidation is that you risk losing credit for any payment made under an income-based repayment plan. If you’ve made payments for this program in the past, it’s probably best to keep your current loan manager and not consolidate. It’s also worth noting that your interest rate will be the weighted average of all the loans you consolidate, so you might actually be paying more interest on your loans if you end up with a longer repayment plan.
The other way to change loan officers is to refinance your student loans. When you refinance federal student loans, those loans become private. You will lose all federal benefits, including loan cancellation programs, income-based repayment plans, and extended deferral and forbearance.
You can also refinance private loans with another private lender. Refinancing gives you more options than consolidation because you can choose from any lender and choose a different term. Most borrowers refinance for a lower interest rate, which can save them hundreds or even thousands of dollars in interest over the life of the loan.
Can your student loans be sold to another lender?
If you have federal student loans, Federal Student Aid (FSA) can transfer your loans to a new manager. You will likely receive an email or letter before or after this happens. Private student loans can also be sold to new providers at any time, but you will be notified of this change.
When the transfer occurs, you may need to set up your payment information again. If you had automatic payments in place with your old lender, you will likely need to re-register with the new loan manager. You may need to take additional steps to re-link your payment information to the account.
How will student loan services evolve in 2021?
The next year will bring huge changes for many student loan borrowers. Granite State, the Pennsylvania Higher Education Assistance Authority (also known as FedLoan), and Navient have all terminated their contracts with the US Department of Education. Borrowers whose loans are managed by FedLoan will have their loans transferred to MOHELA, Edfinancial and Nelnet. The loans from Granite State will be transferred to Edfinancial, and the loans from Navient will be transferred to Maximus. These changes will continue until 2021.
Kantrowitz believes the complexity of the student loan program is one of the reasons companies are leaving the industry.
“It’s not just about the dozen repayment plans, but also the postponements, forbearances, payment pause and interest waiver, and many other details and many change orders from the ministry. American Education, âhe said. “This increases the cost of servicing federal student loans, along with all of the various due diligence requirements.”
The Department of Education is also improving the student loan service overall. For those officers who remain, the ministry is implementing increased performance accountability measures, indicating that officers who fail to meet standards will not be granted new loans.
What to do if your loan manager changes
If you have student loans from one of the service companies leaving the industry, or if your manager has sold your loans to another company, you should upload all of your previous statements, tax forms, and other documents. Store them in the cloud where you can easily access them. Some documents can get lost during the transition, and it is essential that you have your own copies.
If you are working towards the PSLF, file a employer attestation form before your repairer changes. Make sure you have copies of all previously submitted PSLF certification forms.
“If the borrower has been refused the PSLF, he must appeal before the change of provider,” says Kantrowitz. âSometimes records of a borrower’s payment history get lost when loans are transferred to a new loan manager. “