Navient, a major federal student loan servicer, announced Tuesday it intends to end its contract with the U.S. Department of Education and transfer the accounts of roughly six million borrowers to another loan servicer, Maximus.
This is the second time in two months this has happened with a major federal servicer — FedLoan recently announced it doesn’t plan to renew its contract with the Department of Education and wants to offload its federal loans.
The coronavirus pandemic caused the government to issue a moratorium on student loan repayment collection in March 2020, but the moratorium is set to end Jan. 31, 2022.
The recent disruption means there’s a major opportunity for scammers to take advantage of student loan borrowers, according to Forbes. “Borrowers should be wary of companies offering services or outcomes that sound too good to be true, particularly if it involves paying unreasonable fees. Some of these companies try to trick student loan borrowers by pretending to be affiliated with the Department of Education.”
Additionally, student loan borrower advocates have expressed worry that the transfer of so many loans this close to the beginning of the reinstatement of repayment would cause a huge disruption for millions of people.
In a scathing tweet, the Debt Collective, a debtors’ union and advocacy organization for student loan borrowers, seemed pessimistic that the Education Department could initiate a smooth transition of both FedLoan’s and Navient’s accounts.
The Department of Education is reviewing all information and documents from both Navient and Maximus. This is to ensure borrowers and taxpayers are protected, and all legal requirements are met, according to a statement from Richard Cordray, chief operating officer of the Federal Student Aid office.
If you’re still stuck with student debt, it makes sense to try and get rid of your student debt and protect yourself from as much of the upcoming chaos as possible. There are multiple forgiveness programs that you may be eligible for, as well as employer-based student loan assistance programs, options for refinancing student loans, or making your payments a priority through budgeting and paying them off sooner.