7/31/2023 0 Comments Loan default![]() When servicers change, payments may be lost, consumers may incur surprise late fees, and processing problems and missing account records can knock borrowers off track on repaying their loans.”īut with 40 million borrowers resuming repayment all at the same time after a three year moratorium, the current situation is truly unprecedented. “Servicing transfers can create confusion. “Consumers with federal and private student loans report a range of problems around servicers making mistakes, records getting lost, payments being processed too slowly, or servicer personnel not having the latest information about a consumer’s account,” said the agency in 2015. The CFPB had previously documented how student loan servicing changes can be disruptive for borrowers, even under normal circumstances. ![]() “But other borrowers may need to create new logins with their new servicer, re-enroll in autopay, or update their payment information.” “For some borrowers, this process may be smooth with few changes,” said the CFPB. That number may balloon t0 30 million in the coming months as loan servicing transfers continue. The CFPB estimated in a report released earlier this month that 17 million borrowers have already been transferred to new servicers. Borrowers who were with other smaller servicers such as OSLA and Granite State have have had their accounts transferred to new loan servicers such as EdFinancial.Borrowers with government-held federal student loans serviced by Great Lakes Higher Education have been transferred to Nelnet.Borrowers with government-held federal student loans serviced by Navient have been transferred to Aidvantage.Borrowers on track for Public Service Loan Forgiveness who were with FedLoan Servicing have been transferred to MOHELA.The department’s federal student loan servicing system has undergone significant changes during the last several years: Loan servicers are companies and agencies contracted by the Education Department to handle the day-to-day operations of student loans including taking payments, processing paperwork, and fielding borrower inquiries. That’s because millions of borrower accounts have been transferred to new loan servicers since 2020. The Consumer Financial Protection Bureau, a federal watchdog agency that oversees the financial services industry, is warning that many borrowers will face new complications when they return to repayment. ![]() Student Loan Servicing Changes Could Complicate Return To Repayment
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