Happy Halloween, Lama Leaders! This month’s blog post is about the scariest thing I can think of right now (well, in the world of personal finance, anyway), federal student loan servicers. Unless you live under a rock, you’ve probably heard that Navient is trying to get out of the federal student loan servicing business.
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Generally speaking, this wouldn’t be a big deal. However, there are a few things about this news that make me a little nervous on behalf of borrowers whose loans are serviced by Navient.
First of all, Navient is one of the largest servicers of federal student loans in the nation. I’ve read that Navient currently services about six million loans. Considering there are about forty-five million federal student loan borrowers in the United States, Navient is currently servicing about 13% of all federal student loans.
Second, the servicing contract with the United States Department of Education controls how servicers behave. Most people don’t realize there are no real standard rules for servicer conduct. That leaves borrowers at the mercy of the Department of Education’s oversight of the servicing process, including transferring accounts to a new servicer.
Now, that might not seem like a big deal. In the grand scheme of things, it might not be. I just feel like that leaves things a little too much to chance, for my taste. The phrase “fox guarding the hen house,” comes to mind. I’m just saying, a few official rules and regulations to establish a standard of care would not be a bad thing when millions and millions of dollars in student loans are floating around there in the digital ether.
Third, I’ve heard that it’s not uncommon for account information to “disappear” when accounts have been transferred in the past. I don’t know about you, but I can’t see six million accounts getting transferred to other servicers without a snafu or two happening along the way. I can’t help but think that six million borrowers are about to get the short end of the stick when it comes to their account information getting transferred to new servicers correctly. Ruh roh.
I’m working on some ideas to help folks get their federal student loans sorted out before the pandemic forbearance expires at the end of January and student loans come back into repayment. Until then, here are a couple of tips to help you navigate the transition to your new servicer if you are a Navient borrower.
Make sure you document, document, document everything about your student loans. Log in to your accounts and take screenshots of all your loans, balances and payment histories. Make sure you have kept evidence of your payments and be prepared to challenge any mistakes you see in your account once it is handed off to your new servicer.
Remember, you are the one who signed on the dotted line so you are the one who is ultimately responsible for paying your loans and managing your federal student loan accounts. Servicers are not your advocates. They are simply there to “service” your student loan accounts. That’s all. If you are looking for an advocate, look no further than the face you see in the mirror! All you need to be successful at managing your student loans is a little information and the confidence to hold your servicers accountable.
Hopefully, this information helps you with your student loan debt. I have faith in you and your abilities, now go out there and manage those student loans! You can do it!
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