The Department of Education has not renewed contracts with student loan servicer Great Lakes and Nelnet, with plans to change the way student loans are serviced and repaid.
The Department of Education wants to change to a model where loans are paid directly through studentaid.gov for more consistency and accountability.
If the Department of Education doesn’t change plans, 12.3 million Great Lakes and Nelnet customers will have their loans changed to another servicer in December.
In the meantime, borrowers should continue making regular payments to their current servicer.
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As of December 2020, Great Lakes and parent company Nelnet will no longer service federal student loans.
According to a press release by the Department of Education released July 24, the two companies haven’t made the list of the five companies with contracts to service federal student loans. The release states that five companies — EdFinancial Services, F.H. Cann & Associates, Maximus, MOHELA, and Trellis Company — will hold contracts from the Department of Education.
Federal student loans are issued through the government, but after graduation, repayment isn’t made directly through the government. Instead, the Department of Education assigns borrowers to loan servicers, or companies that collect payments and provide customer service. These servicers handle payments and send information to credit reporting bureaus.
The Department of Education contracts with 11 of these servicers, including Great Lakes and Nelnet. But, a reorganization seeks to change the way federal loans are repaid in the future.
The Departement of Education wants to streamline the payment process
A department initiative called Next Gen Business Process Operations aims to streamline the process, and have all federal loans repaid through studentaid.gov. This new system would replace the current system, where all servicers …read more
Source:: Business Insider