What to Do If You’re One of 10 Million Student Loan Borrowers Left in Limbo After Your Servicer Shut Down
- Student loan manager Granite State Management and Resources is not renewing contract with government.
- The government will transfer your CMSM loans to another lender, although the details are unclear.
- Keep copies of all relevant student loan documents now in case they get lost during the transition.
- Learn more about Personal Finance Insider loan coverage here.
Granite State Management and Resources, a student loan company that manages federal loans, announced last month that it would not extend its contract with the government after December. If you are one of the 1.3 million borrowers served by GSMR, the Department of Education will transfer your loan to a new business after this contract expires, although the details are unclear.
The Pennsylvania Higher Education Assistance Agency, another federal lending agency, made a similar move last month by announcing it would not renew its federal contract. This brings the total number of borrowers in flow to almost 10 million.
To find out if your loans are managed by one of these companies, check the initial correspondence you received from the federal government when you took out your loan.
Fortunately, there are several things you can do to prepare for the change – or avoid it altogether if you choose to do so.
Document all your current documents
One of the biggest issues you might face when your loans are transferred from one student loan agency to another is the lack of consistent record keeping. You’ll want to make sure that you can prove that you made timely payments on your loans, so that you can print or download your payment history from your lender’s website and keep it in a safe place.
It is especially important to keep track of your payment history if you participate in the civil service loan forgiveness program or follow an income-based repayment plan, as the time spent repaying these loans is crucial to possibly get a student loan discount.
You should also keep copies of all correspondence between you and your loan manager, including anything that refers to your enrollment in the PSLF or an income-based repayment plan. Save hard copies if you can and upload digital copies to the cloud.
Keep track of your credit report
When your loan is transferred from one manager to another, you may come across bad negative credit reports, such as an incorrect missed payment. It can continue to hurt your credit score if you don’t understand it, so get a copy of your credit report and know where your account is currently.
You can find your credit report for free at annualcreditreport.com from one of the three major credit bureaus each week through April 20, 2022. While this report does not give you your credit score, it will show you information about your credit and payment history, which lenders use to decide whether to grant you a loan. Examining your credit report can help you figure out what you need to improve.
Get a New Manager with a Federal Direct Consolidation Loan
If you have multiple federal student loans from your lender, you may want to consider consolidating them into one monthly payment with a direct consolidation loan and bringing in a new loan manager. Here are the pros and cons of consolidation:
Refinance your loan with a private company
If you want to refinance your student loans, you can only do so with a private company. The government does not have a refinancing program.
This should be an option to be considered with extreme caution, as you will lose major federal protections when you refinance with a private lender. You will not be eligible for forbearance related to COVID-19, which is currently in effect until September 30, 2021. In addition, the Biden administration continues to consider forgiving student loans, which would not apply. to private loans.
Refinancing will allow you to choose a new supplier without waiting for the government to reassign you. You may qualify for a lower interest rate or a term better suited to your needs with a private company. You can also get a variable rate loan from a private lender, while you can only get a fixed rate loan from the government. You can find our list of the best private student loans here.
Contact your repairer for any additional questions
As the federal government decides how to move nearly 10 million borrowers to a new service agent, your service agent will likely have the most recent information on the future of your loan and can likely answer all of your questions. Questions.
If you don’t want to go through the tedious process of switching student loan companies, you can take steps to switch providers now. Otherwise, just make sure to keep a close eye on your documentation to ensure that errors don’t occur during the transition.