Less than two weeks after a significant student loan servicing shakeup, one more U.S. Department of Education student loan servicer is asking it quits.
Granite State Management and Resources, which handles over one million student loan borrower accounts, introduced that it’ll droop its student loan servicing operations for the Department of Education by the top of the 12 months.
“Yesterday, officials from Granite State Management and Resources notified leadership at the U.S. Department of Education office of Federal Student Aid that Granite State will leave the federal student loan servicing program by Dec. 31, 2021,” stated Federal Student Aid Chief Operating Officer Richard Cordray in a press release. “FSA and Granite State will work together to ensure that student loan borrowers will transition smoothly to a different loan servicer.”
Granite State’s announcement comes on the heels of an analogous resolution by the Pennsylvania Higher Education Assistance Authority (PHEAA), whose federal Direct student loan servicing wing operates as FedLoan Servicing. PHEAA introduced earlier this month that it might not be renewing its contract with the U.S. Department of Education. FedLoan Servicing handles over 8.5 million particular person borrower accounts, and likewise is the first servicer tasked with administering the Public Service Loan Forgiveness and TEACH Grant packages. FedLoan Servicing’s contract additionally ends in December.
The abrupt departure of two main student loan servicers from the Department of Education’s large federal student loan system will seemingly be disruptive to hundreds of thousands of debtors. The Biden administration will now need to switch 10 million or extra student loan borrower accounts to different loan servicers. Such servicing transfers by Department of Education contractors have traditionally been chaotic, with widespread issues together with misplaced data and missed funds.
Complicating issues additional is that the servicing transfers must happen within the midst of the expiration of the present moratorium on federal student loan funds. The CARES Act, laws enacted by Congress final 12 months in response to the pandemic and recession, quickly suspended all funds and froze all curiosity on government-held federal student loans. The student loan fee pause was initially set to final six months, however was prolonged a number of occasions. The present extension of the moratorium ordered by President Biden will expire on September 30, 2021.
Advocates for student loan debtors have been urging the Biden administration to increase the student loan fee moratorium into 2022, arguing that debtors and student loan servicers aren’t ready to deal with the transition to common reimbursement.
“Now more than ever, student loan borrowers need Joe Biden to deliver promised debt relief,” stated Student Borrower Protection Center Executive Director Seth Frotman in a press release earlier this month. “Student loan borrowers… also need the White House to extend the pause on student loan payments while Secretary Cardona and the student loan industry come up with a plan to fix the broken student loan system.”
The Biden administration has recommended that the student loan fee pause may very well be additional prolonged, relying on the state of the pandemic and the economic system.
Student loan debtors who’re involved about potential servicing disruptions ought to take steps now to guard themselves by downloading and retaining vital documentation together with fee histories and correspondence, reviewing their contact data, and monitoring their credit studies.
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