68% of Student Loans Are Changing Servicers in 2021

2021 Student Loan Changes

In 2021, the Department of Education is going to reduce their 11 services down to 5 student loan servicers. According to Business Insider, the DOE outlined a plan to reduce their service in order to “better customer service.” Only 3 servicers of the original 11 will continue in 2021: Edfinancial, MOHELA, and Maximus. The two new servicers that will join these three are F.H.Cann & Associates and Trellis Company.  This change will affect an estimated 68% of student loans that will switch to new providers. Loans serviced by Great Lakes, Fedloan, Nelnet, Granite State, Navient, Cornerstone, and OSLA will see their loans change to one of the five servicers continuing with the Department of Education.

Business Insider found that Great Lakes and Nelnet alone made up an estimated 29% of loans​ in 2019, which will now be shuffled between the five servicers. Expects speculate that this will not be a “seamless” transition, expectedly from the Department of Education under this administration. Likely it will be a catastrophe. Under the CARES Act, the DOE is required to notify borrowers six times throughout August about payment plans and interest rates restarting. The DOE has already faced lawsuits for incorrectly reporting that students went into default on their loans when they were in a forbearance plan, as well as the multiple lawsuits against DeVos for her handling of student loan forgiveness programs.

Borrowers should prepare to closely monitor and follow up frequently with their loan provider to ensure that their loans are reported correctly. With the lack of staffing due to Covid-19 and the apparent mishandeling of student cases, there is no way that the DOE will handle transferring the majority of their loans to different agencies. Vigilant borrowers will have to wait in long call holding lines in an attempt to ensure their loans are not mishandled. Meanwhile other borrowers will likely suffer from defaulting on their loans since they won’t know where to pay their loans to. It would make more sense to gradually reduce and transfer out loans rather than radically reduce the servicing agencies by half. 

The new servicers, F.H. Cann & Associates and Trellis Company, have histories of predator​         y lending practices and false reporting on loans. F.H. Cann faced a lawsuit from borrowers​claiming that the lender sent collection notices violating the Fair Debt Collection Practices Act. Other law firms advertise that they can file action against F.H. Cann for debt harassment or federal violations in an attempt to collect.  In regards to Trellis Company, complaints on the Better Business Bureau list how borrowers’ loans were falsely reported against them. This would result in consolidation fines or late fees reported on borrowers’ accounts.

Borrowers should be wary of more aggressive debt collection calls or harassment from their lenders when the government forbearance ends. After several months of no payments on student loans, the DOE will likely be trying to recover the profits lost and capitalize on the confusion between changing servicers to charge late fees and default fines.

Michelle Labayen

Michelle Labayen

Michelle Labayen has been practicing Consumer and Bankruptcy law for more than 16 years. She is a member of the National Association of Consumer Bankruptcy Attorneys (NACBA), and the National Association of Consumer Attorneys ( NACA).

In addition, she is a Max Gardner Bootcamp graduate. Extensive experience has given Michelle a thorough understanding of bankruptcy, including:

  • Chapter 7
  • Chapter 13
  • Adversary Proceedings
  • Litigation under the Fair Credit Reporting Act
  • Litigation under the Fair Debt Collection Practice Act
2021 Student Loan Changes

68% of Student Loans Are Changing Servicers in 2021

In 2021, the Department of Education is going to reduce their 11 services down to 5 student loan servicers. According to Business Insider, the DOE outlined a plan to reduce their service in order to “better customer service.” Only 3 servicers of the original 11 will continue in 2021: Edfinancial, MOHELA, and Maximus.

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Navient's Lawsuit

What Navient’s Lawsuit Settlement Means for Your Student Loans

Back in 2018 nine teachers filed a lawsuit against Navient, one of the government’s student loan servicers for misleading borrowers or blocking them from accessing a public service loan forgiveness program. According to the New York Times, out of the 146,000 applicants to the program at the time, only 3,200 saw their student loans forgiven.

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A Wave of Small Business Bankruptcies is Coming

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With cases of COVID-19 now at 586,057, where only 43,637 have recovered, while 23,604 have lost their lives, there is significant damage that’s been dealt to America’s economy. The sad fact is that we are not sure of when this pandemic will end and so the numbers may continue increasing in the foreseeable future.

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Contact Michelle, today, and get on the path to financial freedom.

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The Law Office of Michelle Labayen, LLC Can Help With The Bankruptcy Process

Anyone can qualify to file for bankruptcy. There isn’t an exact amount of debt or financial difficulty required. You don’t have to show insolvency or meet a certain standard.

You should always speak with a lawyer before beginning the bankruptcy process to ensure it’s the best option for you. Michelle Labayen is a knowledgeable and experienced bankruptcy attorney with offices in New York, NY, and Newark, NJ. Florida licensed attorney Drew Gaddis is counsel and would be representing all clients in Florida.

Miami Bankruptcy Office

100 SE 2nd St Suite 2000 #A
Miami Tower
Miami, FL 33131
Phone: (786) 209-2327