What’s Changing For 14 Million Borrowers, And When? Here’s The Latest

Student loan servicing changes will impact at least 14 million borrowers in the coming months.


Over 14 million borrowers will be impacted by major changes to the federal student loan servicing system in the coming months.

Several major student loan servicing companies contracted with the Department of Education recently announced that they would not be renewing their agreements with the federal government, which means that accounts handled by those servicers will need to be transferred to other companies. Meanwhile, the Department has extended the contracts of several other loan servicers for varying periods. The situation has shifted multiple times over the last several months, causing confusion for borrowers as the national student loan payment pause nears its expiration at the end of January.

Here’s the latest on major student loan servicing changes.

Navient Student Loan Servicing

Earlier this fall, Navient announced that it intends to withdraw from the Department of Education’s federal student loan servicing system. The company services six million federal student loan borrower accounts on behalf of the Department.

Subsequently, the Department approved Navient’s proposal to transfer these accounts to another company called Maximus, an existing contractor for the Department that primarily handles defaulted federal student loans. Maximus will be doing business as “Aidvantage.” In an earlier statement, Navient indicated that the transfers to Aidvantage should be completed by the end of this year, and both Navient and the Department of Education have pledged to communicate clearly with student loan borrowers about the transfer logistics.

Only Department of Education-held federal student loans are being transferred to Aidvantage. Commercially-held FFEL-program student loans and private student loans serviced by Navient should not not be impacted by these changes, and Navient should continue to service those loans.

FedLoan Servicing

FedLoan Servicing, the Department of Education wing of the Pennsylvania Higher Education Assistance Authority (PHEAA), also announced that it would be leaving the Department’s federal student loan system. FedLoan is another major servicer contracted with the Department of Education that handles over eight million borrower accounts, and it is the primary servicer handling the Public Service Loan Forgiveness (PSLF) program. Some FedLoan accounts have already been transferred to MOHELA, another contracted loan servicer for the Department.

However, earlier this month, FedLoan Servicing announced that it had reached an agreement with the Department of Education to extend its servicing contract for another year. As a result, FedLoan will continue to service many federal student loan accounts well into 2022, and it will also continue to administer the PSLF program.

By the end of 2022, the Department will transfer borrowers whose loans are serviced by FedLoan Servicing to other Department of Education servicers such as MOHELA, Nelnet, or Great Lakes Higher Education. Unlike Navient, FedLoan Servicing only handles government-held federal student loans, so all FedLoan accounts will eventually be transferred to new loan servicers by the end of next year.

Other Federal Student Loan Servicers

The Department of Education has agreed to a two-year extension of servicing contracts with several of its other federal student loan servicing contractors including Great Lakes Higher Education, Edfinancial, MOHELA, Nelnet, and OSLA. Borrowers who have loans serviced by these companies should therefore not see any immediate changes to their servicer.

What Should Student Loan Borrowers Do About Student Loan Servicing Changes?

Student loan servicers are simply contractors for the Department of Education. Loan servicing changes do not change the ownership of a student loan or impact the terms and conditions. Servicing changes also have no impact on a borrower’s eligibility for federal student loan repayment and loan forgiveness programs.

Still, student loan servicing changes have historically been disruptive for borrowers. In a report issued in 2015 after the Department’s last major servicing overhaul, the Consumer Financial Protection Bureau (CFPB) found that “servicing transfers can create confusion,” and “when errors occur during servicing transfers, commenters note that this can affect every aspect of the student loan repayment process, leading to problems.”

Department officials have sought to assure borrowers that this time, the servicing transfers will go more smoothly, but they are still urging borrowers to prepare. Borrowers should update their contact information, save and retain key student loan records (including important correspondence, payment histories, and other account information), and review and update their auto-debit information, which may have to be confirmed or renewed following a loan servicing transfer.

Further Reading

Student Loan Forgiveness Changes: Who Qualifies, And How To Apply Under Biden’s Expansion Of Relief

One Month After Biden Expands Student Loan Forgiveness Program, Confusion And Uncertainty

Biden’s $11.5 Billion In Student Loan Forgiveness: Some Is Automatic, Some Is Not. Here’s A Breakdown.

First Wave Of Borrowers Gets $715 Million In Student Loan Forgiveness Under New Program Expansion