05.5.2022 Jodi Anderson
Change is on the horizon for many borrowers in repayment on their federal student loans. Here are some helpful tips to help you prepare for the federal loan servicer changes.
- Do you have federal student loans currently in repayment? Either Subsidized or Unsubsidized?
- Do you know who your loan servicer is for each loan, as they may be different?
- Do you know your outstanding balance and how many payments you have left to make?
- Do you know your current interest rate?
- Do you know how to reach your loan servicers?
Ok, sorry if I overwhelmed you with all the questions, but there is a BIG and I mean really BIG federal loan servicing shift approaching very soon and the time to act is now! Effective 12/31/2021, several of the current federal loan servicers handling your student loan(s) will no longer be contracted with Federal Government to continuing servicing federal student loans and this change is projected to effect over 10 million student loan borrowers. The government will be assigning new servicers to borrowers soon and providing notifications of the servicing change to those borrowers impacted by this change.
You need to know the answers to the questions above so that you can protect yourself if your current student loans are transferred to new loan servicers and you can pick up exactly where you left off. You want to be sure all the information transferred from one servicer to another is accurate. This may also be a good time to gather this information to consider a federal consolidation or a refinance with a private lender to help you save money and time before this servicer conversion begins.
- Log into your student loan account on studentaid.gov to update your contact information or at least confirm everything is correct. You want to be sure that whichever servicer your loan is transferred to, they know how to reach you regarding your loan and how they will be managing your loan.
- visit your account dashboard, find the “My Aid” section, and select “View loan servicer details,” or
- call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243
- Once you have updated or verified your correct contact information, screen print or download to save all of your current information: loan balance, interest rate, monthly payment amount, etc. to be sure that when this information is transferred over, you can verify against the records you saved that all transferred information is all correct for your continued repayment of your loan.
- Check your credit report to be sure these loans are listed with the proper information before the transfer occurs and again after the transfer to be sure your credit report remains accurate.
- If you are working towards Public Service Loan Forgiveness (PSLF) be sure to have documented your on-time payments before the transfer and be sure to familiarize yourself with the terms of the Limited PSLF Waiver Information for expanded eligibility.
Important reminder, this pertains to Federal Student Loans only. But again, this could be the perfect time to gather this information for both federal and private loans to see if there is a better way to repay your student loans to save money with possibly a lower interest rate and lower monthly payment and working with just one servicer.
A quick recap on the differences between a federal loan consolidation and refinancing with a private lender.
Federal Consolidation provides you the option of combining multiple federal student loans only into one loan with a fixed interest rate. The interest rate is calculated using the weighted average of the loans you choose to include in the one consolidation loan. This loan is only available for combining federal student loans and cannot include any private loans.
Refinancing provides you the option of combining multiple federal and/or private student loans into one loan with a fixed or variable interest rate. Refinance loans are only offered by private or state-based lenders, so federal benefits are no longer applicable. The interest rates are based on current rates in the industry, so be sure to shop carefully (by comparing APRs) to consider more than just interest rate, as the lowest interest rate may be variable which adds risk of paying more than you might have expected. Also be sure to compare features and benefits, as well as flexibility of repayment terms to best fit your budget. RISLA’s refinance program may be a good place to start your search.
If you would like to learn more about refinancing, download our free guide today!