How to Prepare for Loan Servicer Changes: A Look Back at Changes in 2020 & 2021 and What to Expect for 2022

We have seen many changes and updates this past year and a half within the student loan world. It’s been a little hard to catch our breath… and then the federal government announced yet another mass student loan servicer change for the end of the year! 

How did we get here? Let’s take a look back.

Timeline of student loan changes in 2020 & 2021

February 23, 2020: The first of the changes this year happened right before COVID-19 rocked the U.S.: The National Student Loan Data System website was the last to merge into StudentAid.gov, which became the main hub for all federal financial aid resources.

Before this change, you had to go back and forth between three main websites to complete different steps and put your financial aid package together, making it a very confusing and time-consuming process. The merger into one site is a significant improvement.

March 13, 2020: Amid escalating business closures, layoffs and economic hardships nationwide, President Trump declared that he waived “interest on all student loans held by federal government agencies […] until further notice.”

March 20, 2020: President Trump announced that student loan interest and payments for federal student loans could be paused for 60 days without penalty.

Education Secretary Betsy DeVos further clarified that borrowers would automatically have interest rates on federal student loans updated to 0% for at least that 60-day period. Further, the 60-day period for suspending student loan payments was optional, and borrowers would not be automatically enrolled into this forbearance, so borrowers would need to contact their federal loan servicers to ask for it.

March 27, 2020: The $2 trillion stimulus plan, the CARES Act, was signed into law by President Trump, which provided enormous relief to borrowers with federal student loans.

National student loan forbearance was implemented automatically for all federally held student loans until September 30, 2020, and borrowers had — and still have — the right to request a refund for any payments made between March 13 and September 30, 2020 (the provision was recently updated to include payments made between March 13, 2020, and the end of the payment pause).

Other important provisions of the coronavirus student loan relief bill:

• The six months of suspended payments count toward loan forgiveness programs, including Public Service Loan Forgiveness (PSLF) and forgiveness from Income-Driven Repayment (PAYE, REPAYE, IBR) plans.
• No interest will accrue for six months until September 30, 2020, extending the Trump student loan interest freeze, which started March 13, 2020.
• Employers who contribute to their employees’ student loans receive a tax break, although that measure must be renewed in 2021 to be permanent.
• Borrowers in default will have their six months of suspended payments count toward the nine months needed for loan rehabilitation.
• No collection, wage garnishment or seizure of tax refunds will happen through September 30, 2020, retroactive to March 13, 2020.

January & August 2021: President Biden extends interest and payment pause until August 30, 2023, unless the lawsuits are settled earlier than that..

October 6, 2021: The Department of Education announced a sweeping action to expand Public Service Loan Forgiveness (PSLF). This Public Service Loan Forgiveness Waiver opportunity expired on October 31, 2022. Both current and former public servants had the opportunity to benefit from this PSLF order. The Department of Education waived the normal requirement to be employed at a qualifying employer when applying for and receiving PSLF.

Editor's note: Even though the PSLF Waiver is over, almost all of the benefits are still available through the IDR Waiver. If you're on an income-driven repayment plan or pursuing PSLF, learn about how it can help you get faster forgiveness.

Most recent changes to student loan servicing companies

June 24, 2020: A press release announced that the Department of Education’s Office of Federal Student Aid signed new contracts with five companies to service federal student loans starting in mid-December 2020.

The driving force behind this major change comes from the Department of Education’s goal to improve customer service and hold servicers more accountable for their performance in managing federal student loans. This news has been what borrowers have been yearning for, and Education Secretary DeVos believes achieving this accountability starts with firing and replacing the previous four major servicers.

And if you didn’t already have change fatigue so far this year, more announcements were coming.

August 4, 2020: The chief operating officer of Federal Student Aid, Mark Brown, took to the Department of Education’s blog to calm the waters, explaining that even though the ED awarded these new servicer contracts, these companies won’t start doing this work immediately:

We’ve got to first put the tools, technology, and training in place to ensure that you get the right answer with every interaction.

To make sure there’s no interruption with your current loan servicer, we’ve made it possible to extend the servicing work for FedLoan Servicing (PHEAA), Great Lakes, Navient, and Nelnet through December 2021 and for CornerStone, Granite State – GSMR, HESC/Edfinancial, MOHELA, and OSLA Servicing through March 2022.

Overall, this is good news. The ED is working to improve the flawed federal student loan system and taking the time to make sure there will be a smooth transition. This gives us a second to breathe, which is good because more changes are still coming this year.

July 8, 2021: FedLoan Servicing notified the Department of Education that it no longer wished to service federal student loans beyond the expiration of its contract on December 2021.

September 28, 2021: Navient announced its desire to quit the federal student loan servicing business and transfer its 6 million borrower accounts to a company called Maximus.

October 4, 2021: The Department of Education transferred the customer service of federal student loan accounts from FedLoan Servicing to MOHELA, another member of ED’s federal loan servicer team.

What to expect when you get a new federal student loan servicer in 2021/2022

According to StudentAid.gov, you can expect the following to happen when you are assigned a new federal student loan servicing company:

• You’ll receive an email or a letter from your assigned servicer to inform you about the transfer.
• You’ll receive a welcome letter from the new servicer after the new servicer receives your loans. This notice will provide you with the new servicer’s contact information and inform you of the actions that you may need to take.
• All of your loan information will be transferred from your assigned servicer to your new servicer. Still, you may only be able to see online information that covers the period since your new servicer took your loans over.

There will be no change in the terms of your loans, and your previous loan servicer and new loan servicer will work together to make sure that all payments you make during the transfer process are credited to your loan account with the new servicer.

Related: Central Research Student Loans: What to Know About the New Federal Servicer

What to do when you receive a welcome letter from your new servicer

Student loans can bring with them a significant amount of anxiety. Getting a welcome letter from a new servicer can add a new layer of stress. Here’s what to do to ensure a smooth transition:

• Begin sending your loan payments to your new servicer. If you use a bank or bill-pay service to make your loan payments, update the new servicer’s contact information with the bank or bill-pay service.
• Follow the new servicer’s instructions for creating an online account so that you can easily communicate with the new servicer and track your loan account.

You will determine the success of managing your student loan debt, not the government, your loan servicer or anything else. If you’re not sure about your student loan plan, we’ve got you! Contact us to get your student loan repayment plan mapped out now.