Less than two weeks after FedLoans (the federal direct loan servicing arm of the Pennsylvania Higher Education Assistance Authority) announced that it would not be renewing its contract with the US Dept of Education, Granite State Management and Resources announced that it would suspend its loan servicing operations for the DoE by the end of the year.
FedLoans, responsible for servicing more than 8.5 million borrowers’ loans (and also the ONLY servicer for borrowers working to qualify for PSLF (public student loan forgiveness) and Granite State will collectively work to transfer data and servicing to another yet-to-be-named provider.
Until that time comes, there are a number of moving parts that make this series of announcements the perfect storm of student loan confusion. The moratorium on federal student loan payments is set to expire on 9/30/2021 and while the Biden administration has hinted at a possible extension of the moratorium, nothing has been made official. Until we know more details, here’s a list of the best things that we believe borrowers can do to ease any confusion or complications:
- Print off your history of payments in December of 2021. Be sure this printout shows current outstanding balance, interest rate, and ENTIRE PAYMENT HISTORY with that service provider.
- If you are working towards PSLF, maintain copies of accepted employment certification forms as well as obtain a printout in December 2021 which shows the number of payments that have been counted towards the 120 needed for PSLF forgiveness.
- Remember that COVID-related forbearance periods still count towards the 120 payments for PSLF, but you’ll need to submit an additional form. More information is available on this FedLoans page.
- When your new service provider has been confirmed, create your login page ASAP and ensure correct information has been transferred. Begin an escalation if data is incomplete or inaccurate.
- Monitor your credit report to ensure that your previous service provider (FedLoan or Granite State) didn’t inadvertently report your transferred loan as a bad debt, which could adversely affect your credit score.
The prioritization of cash flow is paramount in any financial plan. Having a game plan for how to most effectively eliminate your debts is critical to building towards financial independence. Be sure to check out our interview with Student Loan Planner’s consultant Rob Bertman!