Navient wants to quit federal student loan program, impacting 6 million borrowers
Student loan manager Navient wants to step down from the business of managing federal loans, the company said in a press release on Tuesday. The move will affect around 6 million student loan borrowers whose loans will be assigned to a new manager.
Navient submitted a request to transfer his federal loan service contract to another student loan company, Maximus. The transfer is subject to approval by the Federal Student Aid Office (FSA), with finalization expected in the third quarter of 2021.
Navient is pleased to work with the Department of Education and Maximus to ensure a smooth transition for borrowers and Navient employees as we continue to focus on areas other than servicing government student loans.
WHAT TO DO IF YOUR STUDENT LOAN DEPARTMENT CLOSES
Navient, who was once part of Sallie Mae, was at one point the largest student loan manager in the country. The company has been involved in several lawsuits, alleging that it has deliberately and knowingly overcharged borrowers on their student loans.
Navient is just the latest student loan manager to abandon its federal obligations. Recently, two other big departments – FedLoan Servicing and Granite State Management & Resources – announced that they were not renewing their federal contracts, which will affect 10 million borrowers.
If your student loan manager closes, your loans will automatically be reassigned to a new manager with the same repayment terms. But if you are not happy with your student loan repayment plan, consider your options like income based repayment plans, student loan forgiveness and the refinancing of private student loans.
You can compare student loan refinance offers without impacting your credit score on Credible.
FSA PREPARES FOR ‘UNPRECEDENTED TASK’ OF RESUMING STUDENT LOAN PAYMENTS AFTER ABSOLUTION
Lawsuits have complicated federal service
The Consumer Financial Protection Bureau (CFPB) sued Navient in 2017 for having “systematically and illegally” misled borrowers about repaying their loan, in particular by causing them to lose their right to lower monthly payments and a student loan discount. .
âFor years, Navient let down consumers who relied on the company to give them a fair chance to pay off their student loans,â former CFPB director Richard Cordray said in a press release at the time of the interview. trial. âAt each stage of the reimbursement, Navient has chosen to shorten and deceive consumers to save on operating costs.
In addition to the CFPB lawsuit, Navient has been sued by several states including Illinois, New Jersey, Pennsylvania and Washington. The lawsuits allege that Navient misled and abused student loan borrowers every step of the way, from creating loans to collecting delinquent student loans.
Navient dismisses allegations that she was involved in misconduct, instead blaming state-specific regulations on the service of federal student loans.
STUDENT LOAN COMPANY USED MISLEADING PRACTICES, Says CFPB: TIPS FOR CHOOSING A REPUTABLE LENDER
What to do if your student loan officer changes
The FSA is working to transition affected borrowers to new student loan managers before federal student loan payments resume in February 2022. If your student loans are managed by Navient, FedLoan Maintenance or Granite State Management, you don’t have to take any action on your student loans.
While the FSA will take care of the transfer of your loans, there are still a few things you can do to prepare for resuming payments under a new student loan manager.
BIDEN ADMINISTRATION PROBLEMS “FINAL EXTENSION” OF FEDERAL STUDENT LOAN REPAYMENT BREAK
Make sure your contact details are up to date
The education department is working on a number of email and social media campaigns to keep borrowers informed over the coming months as student loan services change and monthly payments resume. Make sure your contact information is correct on the FSA website so you don’t miss any important communication about the status of your federal loans.
PSLF PROGRAM CALLED “BROKEN” AND “CONFUSING” AFTER BIDEN ADMIN REQUESTS A FEEDBACK
Join an income-based repayment plan
When your monthly payments resume in February 2022, they will be the same as before the start of COVID-19 administrative forbearance in March 2020. If you think you won’t be able to pay your student loan repayments, be proactive in joining an income-based repayment plan (IDR).
Depending on the type of federal loan you have, an income-based repayment plan can limit your monthly loan payment to 10-20% of your disposable income. You can read more about IDR plans on the FSA website.
WHAT TO DO IF YOU ARE NOT QUALIFIED FOR A $ 9.5B STUDENT LOAN REMEDY UNDER BIDEN
Refinance your private student loans at a lower rate
Refinancing a student loan occurs when you take out a new loan to pay off your current student loans with new terms such as a lower interest rate. Refinancing can help you lower your monthly payments, pay off your loans faster, and save money on interest over time.
Well-qualified borrowers who refinanced their longer-term student loans on Credible may have lost over $ 250 on their monthly payments, for example. Those who refinanced a shorter-term loan were able to pay off their loans 41 months faster and save almost $ 17,000 in the process.
Student loan refinancing rates are near record lows, Credible data shows. You can browse the interest rates from real private lenders in the table below.
98% OF REJECTS FOR WAIVER OF PUBLIC SERVICE LOAN REFUSED
How to decide if you should refinance your student loans
While refinancing can help you get a lower student loan rate, it is not. suitable for everyone. Refinancing your federal loans to a private loan, for example, will make you ineligible for federal benefits such as income-tested programs, administrative forbearance, and student loan waiver programs.
If you have private student loans, you have nothing to lose by refinancing at a lower interest rate. Student lenders generally don’t charge a refinance fee, which allows you to take advantage of lower interest rates on student loans without increasing the cost of borrowing.
To find out if refinancing is right for you, use Credible’s student loan refinance calculator.
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