DO YOU KNOW WHERE YOUR STUDENT LOANS ARE?

Get Ready and Hold On To Your Hats! 

The Department of Education is at it again - changing servicers for their direct loan borrowers.  This seems reminiscent of the days of PUT loans, when borrower's servicers were changed, sometimes two or three times.  The result was a significant upsurge in loan defaults because borrowers were making payments to or trying to contact their old servicing company.  Many times the old servicing company could not even tell the borrower where their loans were being transferred to (or had already been transferred to) and NSLDS could not locate the loans.  It was a mess!

So, why are they changing the system AGAIN? 

This switch up stems from the contract termination between the Department of Education and the Direct Loan Servicing Center.  This means that, if you are a previous FFELP borrower who went through the agony of the PUT disaster a few years ago, your loans will probably not be affected (but, hey, these are the Feds, so keep your fingers crossed!) For those of you who were Direct Loan customers - fasten your seat belts, the ride is about to get bumpy!

Those Direct Loans accounts previously serviced by the NFP servicers (Not For Profit servicers) will be transferred to other NFPs within the federal loan servicing team.  The specific plan calls for loans to be transferred in August and September, as noted below:

COSTEP, EDGEucation Loans and EdManage accounts will be transferred to MOHELA.  Those previously serviced by KSA Servicing will be transferred to Aspire Resources Inc.

Ideally, the borrowers will be notified prior to the account's transfer.  As always, borrowers should monitor their loan's on nslds.ed.gov.  We also strongly encourage borrowers to verify their loan information before and after the transfer - sometimes the amounts may not match and you certainly do not want to be paying any extra for your loans due to a clerical error!
 
 All other loans formerly serviced by Direct Loans should have their transfer completed by August 29th. These accounts should be serviced by FedLoan, DOE-Sallie Mae or DOE-NelNet.  Again, it is crucial that borrowers monitor their accounts, including balances.  If you previously had auto payments set up, make sure the debit from your former servicer stops and be sure to set up a new auto payment account with your new servicer.  Many borrowers are experiencing a delay when dealing with auto debit and payments, so be prepared to make a payment by check, debit, etc. for a month or so if necessary.

As always, it is the borrower's responsibility to maintain their accounts in a current status- even if their servicers are changed without notice.  As we said earlier, fasten your seat belts!