More Than 15 Million Student Loan Borrowers Are Getting Dropped by Their Servicer. How to Plan Ahead for the ‘Chaos’

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Graduates are pictured during the University of Massachusetts Boston commencement ceremony on Aug. 26. A third student loan servicer announced recently it will exit the federal student loan business, a move that will affect millions of student loan borrowers.
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If you have federal student loans, there’s a good chance you’ve been dropped by your loan servicer this year. 

Navient, one of the largest servicers in the U.S., announced this week it’s exiting the federal student loan business and passing its borrowers to Maximus, another federal loan servicer that focuses on defaulted loans. The transition will require approval from the Federal Student Aid (FSA), and will affect around six million borrowers.

Navient is the third lender to end its relationship with the government this year, following the Pennsylvania Higher Education Assistance Agency (also known as FedLoan), and Granite State.  

That means the Education Department will have to move more than 15 million borrowers, almost a third of all borrowers, to new servicers — a process that may cause confusion and could lead to errors, according to Robert Farrington, founder and CEO of The College Investor, a site that provides advice on student loans.

“There’s going to be a lot of chaos,” Farrington says.

On top of that, 40 million student loan borrowers who have taken advantage of pandemic-related forbearance will begin repayments come Jan. 30, 2022. 

Pro Tip

Use these extra months of student loan forbearance to prioritize other aspects of your finances, such as building an emergency fund (if you haven’t already) or paying down more pressing high-interest debt.

Most people “probably haven’t looked at their student loans in 20 months, so you have to get people re-engaged with the fact that they have student loans,” says Farrington. “Combine that with the fact that all their prior information, contact, website logins, and letters received in the mail are from a company that’s not going to be their future company anymore.”

What to Do If Your Student Loan Servicer Changes

There’s no need to panic if your student loan servicer is changing. Take this as an opportunity to do a check-up on your student loans and prepare for repayment. Before your loan transfers to a new servicer, you should do the following:

Track Down Your Loans

If the Department of Education moves your loan from one servicer to another, you should get a notification from both your current servicer and your new one. But if you’re like most borrowers, you likely haven’t made student loan payments in almost two years, so it doesn’t hurt to double-check who your current loan servicer is and who will be your new one. If you’re not sure who your loan servicer is, log in to to find out. You can also find out by contacting the Federal Student Aid Information Center (FSAIC) via phone, live chat, or email. 

“Track down your loans, know what you owe, and get your website login updated,” says Farrington. “If you log in and see that you have a loan with a company you don’t recognize, go find that company. 

Update Your Contact Information

Make sure your personal information is up-to-date on your account, including your home address, phone number, and email. That way, you can stay in the know regarding your loans and the forbearance period from your new loan servicer. 

Keep Records of Your Student Loan Information

Farrington recommends saving or printing a copy of all your loan information, including your payment history, current loan balances, interest rates, and monthly statements. Having a record of your loans can help ensure they’re accurate once transferred to a new servicer.

“Hopefully you’ll never need it, but it’s really nice to have that track record of information if things don’t transition smoothly somehow,” says Farrington. “Having your own paper trail will go a long way.”

It could also help you know who to contact if you’re interested in exploring forgiveness, requesting deferment, consolidating, or enrolling in an alternative repayment plan.

Start Putting Together a Plan Now

You still have four months until the student loan forbearance period ends, but experts recommend taking advantage of this extra time to get ahead with your finances and make a plan for resuming payments next year. 

That looks different for everyone, but maybe for you, that means trimming or readjusting certain spending areas now to have room in your budget in 2022. It could mean researching repayment plans or starting a spreadsheet to help you map out your repayment strategy. The U.S. Department of Education said the latest extension is the “final” one, so it’s best to get ahead of the curve while you can.

“Your first payment won’t be due until February,” says Farrington. “But by January, you should make sure you’re on the right repayment plan, know where you’re sending your payments to, and maybe set up that online bill pay so you know you’re squared away.”