As Navient Leaves 6 Million Student Loans Stranded, What Should Borrowers Do Now?
Navient became the latest federal student loan servicer to opt out of the business when it said it will no longer service the loans, leaving about six million borrowers waiting to be assigned to a new lender.
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The company’s decision to quit student loans, announced on Tuesday, left the U.S. Department of Education without one of its largest student loan servicers. Navient’s student loan portfolio is estimated at about $1.7 trillion, CNBC reported.
Navient is the third lender this year to end its relationship with the federal government. The others are FedLoan and Granite State. According to The New York Times, Navient wants to move its loans to Maximus, another federal loan servicer, as a way to provide a smooth transition to borrowers as Navient focuses on other businesses.
The Education Department is in the process of reviewing information from Navient and Maximus to “ensure that the proposal meets all legal requirements and properly protects borrowers and taxpayers,” Richard Cordray, chief operating officer of the department’s Federal Student Aid office, said in statement.
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Nearly all current federal student loan borrowers have been allowed to skip their payments since the government imposed a moratorium on collections in March 2020 in response to the COVID-19 pandemic. But the Biden administration has said it will restart collections on Jan. 31, 2022.
The decision by Navient, FedLoan and Granite State to exit the federal student loan business has left about 16 million borrowers waiting to be assigned a new servicer, higher education expert Mark Kantrowitz told CNBC.
“Problems can occur with any transition, so there are a few things borrowers should do now if their servicer will be changing,” Kantrowitz said.
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He recommends logging into your current loan servicer’s website and saving or printing a copy of your loan information. Keeping this handy can help ensure that your loan information is accurate after it’s transferred to a new servicer.
“Get a list of all your loans, including your payment history, current loan balances, interest rates and monthly loan payment amount,” Kantrowitz said.
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You also should double-check that your servicer has your current contact information to ensure that you get notices about upcoming changes. If you’re unemployed or otherwise dealing with a financial hardship, you can request an economic hardship or unemployment deferment. If you don’t qualify for those, one option is to use a forbearance to suspend your payments, though this will lead to a higher balance when payments resume.
Meanwhile, if you wonder how a possible government shutdown this week might impact student financial aid, the answer is not much — at least if the shutdown doesn’t last too long.
As GOBankingRates reported, a shutdown won’t affect student financial aid because the Education Department’s Office of Federal Student Aid uses outside contractors for most of its administrative work. Since financial aid goes out at the beginning of the semester, a government shutdown shouldn’t delay financial aid payments — unless it lasts into the start of the winter semester.
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This article originally appeared on GOBankingRates.com: As Navient Leaves 6 Million Student Loans Stranded, What Should Borrowers Do Now?
