Federal student loan borrowers have begun receiving notices from the Education Department's Office of Federal Student Aid (FSA) about important changes to their Direct loans.
If your student loans are serviced by one of several prominent federal loan servicers, you may have received an email that your loans are being transferred to a new loan servicer.
Earlier this year, the Pennsylvania Higher Education Assistance Agency (a.k.a. FedLoan Servicing), Navient or Granite State Management & Resources notified the Biden administration of their exit from the federal student loan program. Over the next few months, these loan servicer changes will impact millions of federal borrowers.
Keep reading to learn more about what you should do if your student loan servicer is changing, such as refinancing to a private loan. If you decide to refinance your student debt, visit Credible to compare interest rates across multiple private lenders without impacting your credit score.
Here's what to know if your student loan servicer is changing
The Education Department's student loan servicer change will not affect your existing terms and conditions, interest rate, loan amount or monthly payment amount. It also won't impact your eligibility for available repayment plans, loan discharge programs or loan forgiveness programs like Public Service Loan Forgiveness (PSLF).
During this time period, log into the Federal Student Aid website using your FSA ID to make sure your contact information, like phone numbers, is up to date. That's also where you can find your current loan information.
While your loan servicer changes, you'll remain on the 0% interest payment pause for federal student loans. However, the COVID-19 payment suspension ends in January 2021. Beginning in February, you'll need to repay your student loans on the terms you had before federal forbearance went into effect.
If you're not ready to resume student loan payments in February, consider a few options:
- Apply for economic hardship or unemployment deferment on the FSA website
- Enroll in an income-driven repayment plan before forbearance ends
- Lower your monthly payments with student loan refinancing
It's important to know that refinancing your federal loans into a private loan will make you ineligible for the current federal forbearance period, as well as other government protections like income-driven repayment and student loan forgiveness programs.
Use a student loan refinance calculator to see if this option can help you reduce your monthly payments. You can browse private student loan rates in the table below, and visit Credible to see your estimated interest rate for free.
How to get better terms on your student loans
As your loans are transferred to a new servicer, your repayment plan will stay the same. If you're not happy with your current student loan rate or other terms, consider refinancing to a private student loan with better terms.
Refinancing your student loans to a lower rate can help you reduce your monthly payments, pay off your debt faster and save money on your college loan debt over time.
A recent Credible analysis found that well-qualified borrowers who refinanced to a shorter loan term were able to pay off their student loans 41 months faster and save nearly $17,000 in interest charges over the life of the loan. Those who refinanced to a longer loan term saved more than $250 on their monthly payments, all without adding to the total cost of interest.
To learn more about private student loan refinancing, get in touch with a knowledgeable loan officer at Credible who can help you decide if this option is right for you.
Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at email@example.com and your question might be answered by Credible in our Money Expert column.