Nelnet and Great Lakes will no longer serve your federal student loans

Education Secretary Betsy Devos (Photo by John Laparski / Getty Images)

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If Nelnet or Great Lakes serve your student loans, you can get a new student loan service.

Here’s what you need to know.

Student loans

Nelnet and Great Lakes, which are part of the same company and collectively administer federal student loans for approximately $ 13 million student loan Borrowers may stop servicing federal student loans after December 2020. The surprise announcement comes as the US Department of Education, led by Secretary of Education Betsy DeVos, seeks to improve servicing of student loans . What is a student loan manager? When you repay federal student loans, you are not paying the federal government or the Department of Education directly. Instead, you pay your student loan manager, who collects your student loan payments and provides customer service.

“This is another important step towards our commitment to improve customer service and to hold our contractors accountable for their performance,” said DeVos. “Students, parents, borrowers and schools deserve a world-class experience when dealing with [Federal Student Aid], and I have no doubts that FSA has hired the companies with the knowledge, experience and expertise to make it happen.

What happened

On June 24, the Ministry of Education ad that Federal Student Aid – which annually provides more than $ 120 billion in financial assistance to more than 68 million students at 5,800 post-secondary institutions – has signed contracts with five student loan officers to manage federal student loans and provide “improved customer support”:

Edfinancial Services LLC
FH Cann & Associates LLC
MAXIMUS Federal Services Inc.
Missouri Higher Education Loan Authority (MOHELA)
Texas Guaranteed Student Loan Corporation (Trellis Company)

DeVos wants to streamline and simplify the repayment of student loans. Under DeVos’ new plan, you could start making student loan payments through a centralized platform, Studentaid.gov, rather than through individual student loan service websites. DeVos believes that the current student loan management system lacks consistency and accountability, which hurts student loan borrowers.

Nelnet: “We are shocked”

“We are shocked that the two highest rated service agents and the dedicated employees who are responsible for achieving these rankings are not being considered by the department for this contract,” said Jeff Noordhoek, CEO of Nelnet. mentionned. “We are frustrated and disappointed with this decision and the lack of transparency in the process and we will pursue all available legal avenues to ensure that students receive the high quality service they expect from us. “

In June 2009, the Department of Education awarded Nelnet the contracts for the management of student loans. As of March 31, 2020, Nelnet managed $ 185.5 billion in student loans for 5.5 million borrowers under its contract, and Great Lakes managed $ 243.2 billion in student loans for $ 7.3 million. borrowers under its contract. These service contracts expire on December 14, 2020 with two optional six-month extensions until December 14, 2021. In addition, Nelnet manages $ 48.7 billion in FFELP, private education and consumer loans for 2.1 million borrowers who are not affected by the decision of the Ministry of Education.

What to do next

If Nelnet or Great Lakes are handling your federal student loans:

Do not panic.
Continue to make your regular monthly student loan payments to Nelnet or Great Lakes.
You don’t need to apply for a new student loan service.
Education will assign you a new student loan officer and communicate with you prior to any transition.
Once you are notified of your new student loan manager, you can begin sending student loan payments to your new student loan manager.
Once that happens, make sure to update the automatic payments.

How to pay off student loans faster

If you have student loans, make sure you have a game plan. What’s the best way to pay off student loans faster? Start with these four options, all free: