Ministry of Education extends Navient federal loan service contract until 2023
Student loan manager Navient has extended his federal contract with the Department of Education until 2023, although he previously announced on September 28 his intention to withdraw from the federal student loan business.
The contract renewal was posted on SAM.gov, a website that hosts data on government contracts.
The two-year contract extension comes with a price tag of $ 391 million, according to the renewal document. Navient will be responsible for managing “student aid obligations including, but not limited to service, specialty programs, and ongoing debt consolidation” until September 14, 2023.
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The 6 million student loan borrowers whose federal loans are managed by Navient will ultimately be transferred to a new manager, Maximus, subject to Department of Education approval, Navient said ahead of his contract renewal. But Navient isn’t the only student loan company considering ending its federal contract.
Two other loan officers, FedLoan Servicing and Granite State Management & Resources, announced in July that they were not renewing their federal contracts which expire at the end of the year, which will affect 10 million borrowers.
The Federal Student Aid Office (FSA) is working to reduce confusion as millions of borrowers are transferred to a new loan department around the same time that federal student loan repayments are expected to resume in some months.
FSA COO Richard Cordray said in a statement that “the FSA will provide close oversight and hold officers accountable to ensure borrowers are supported and not harmed during this transition.”
If you are one of the 16 million student loan borrowers whose federal loans are managed by Navient, FedLoan Servicing, or Granite State Management, your loans will automatically be reassigned to a new manager. Your student loan repayment terms, including the interest rate, repayment date, and loan amount, will remain the same.
Read on for tips on how to prepare for the upcoming transition. Plus, find out what you can do if you’re unhappy with your current federal student loan repayment terms, such as refinancing a student loan. You can compare student loan refinance rates without impacting your credit score on Credible.
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3 things to do now if your student loan officer changes
You don’t have to do anything if your student loan manager goes out of business. The education department will handle the transition to a new service agent and your loans will be automatically reallocated. Still, there are a few things you can do now to prepare yourself, especially as the COVID-19 payment break – which runs until January 2022 – is coming to an end:
- Make sure your contact details are up to date on the FSA website. This way, you don’t miss any important communication regarding your new loan manager.
- Check if you have signed up for automatic payments. If you’ve set up automatic payment for your federal student loans, your next student loan payment will be deducted from your account in February 2022.
- Review your current student loan repayment terms. Take a look at your interest rate, loan amount, and monthly payments so you can start planning to pay off your debt.
By getting your information in order now, you can expect a smooth transition as your server changes and your payments resume.
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What to do if you are not happy with your student loan repayment plan
When your loans are assigned to a new student loan manager and the federal administrative forbearance period expires, you will be responsible for repaying your student loans with the same repayment terms you had before. Your monthly payment, interest rate and loan amount will remain the same.
But if you’re unhappy with your old loan repayment plan, you have options to lower your monthly payments and pay off your loans faster. Here’s how.
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Refinance at a lower interest rate
Refinancing a private student loan is when you take out a new student loan with better terms to pay off your current loans. By refinancing at a lower interest rate, you may be able to lower your monthly student loan payments or pay off your debt faster.
Student loan borrowers who refinanced their shorter-term loan on Credible were able to save almost $ 17,000 on average and repay their loans 41 months faster, according to an analysis by Credible. Those who refinanced a longer term loan were able to reduce their monthly payments by more than $ 250 on average, all without adding to the total interest paid.
While refinancing for private student loans may allow you to get a lower rate on your student loan debt, it is important to note that refinancing your federal student loans would make you ineligible for certain resources such as income-tested repayment. and student loan forgiveness programs.
You can browse the student loan refinance rates in the table below and see your estimated rate by prequalifying on Credible. Once you have a good idea of the rates you qualify for, use a student loan calculator to see if refinancing is right for you.
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Join an income-based repayment plan
The federal government offers a few debt relief options for borrowers who are struggling to repay their student loans, including Income Based Repayment (IDR). IDR plans limit your monthly student loan payments to 10-20% of your disposable income, depending on the type of loan you have.
You can register by logging into your account on the FSA website.
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Request additional federal forbearance
The COVID-19 administrative forbearance period has been extended until the end of January 2022, but many borrowers say they will not be able to resume payments. If this sounds like you, consider asking for an economic hardship deferral or unemployment deferral. Pending FSA approval, you may be eligible for a suspension of your student loan payments for up to an additional 36 months.
To learn more about student loan repayment options, contact a loan officer at Credible who fully understands the needs of student borrowers.
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