The Department of Education on Friday announced a student loan servicing contract extension for Navient NAVI -0.5%, one of the Department’s major loan servicers. But a similar contract extension was not implemented for FedLoan Servicing. Here’s what it means for borrowers as student loan servicing changes continue.
Student Loan Servicing Changes
Last month, Navient announced that it intends to exit the U.S. Department of Education’s loan servicing system. Just weeks prior to that, FedLoan Servicing and Granite State Management & Resources — two other major loan servicers for the Department — had also announced their withdrawal.
As a result of the cascade of student loan servicer exits, the Department would have to transfer millions of borrowers who have Department-held federal student loans to a new servicer.