More than 15 million student loan borrowers are being dropped by their servicer. So plan the “chaos” in advance

If you have government student loans, there is a good chance that you have been dropped by your loan service provider this year.

Navient, one of the largest service providers in the United States, announced this week that it is pulling out of the state student loan business and handing its borrowers over to Maximus, another state loan service provider focused on defaulted loans. The transition requires the approval of the Federal Student Aid (FSA) and affects around six million borrowers.

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

That means the Department of Education must move more than 15 million borrowers, nearly a third of all borrowers, to new service providers – a process that can create confusion and lead to errors, according to Robert Farrington, founder and CEO of The College Investor, a website who offers advice on student loans.

“There will be a lot of chaos,” says Farrington.

In addition, 40 million student loan borrowers who have used the Pandemic Forbearance will begin repaying January 30, 2022.

Pro tip

Use those extra months of student loan deferral to prioritize other aspects of your finances, such as:

Most people “probably haven’t looked at their student loans in 20 months, so you need to bring people back to the fact that they have student loans,” Farrington says. “Combine that with the fact that all of your previous information, contacts, website logins, and letters that you received in the mail came from a company that will no longer be your future business.”

What to do if your student loan service provider changes

There is no need to panic if your student loan service provider changes. Take this as an opportunity to check your student loan and prepare for repayment. Before your loan is transferred to a new service provider, here are some things you should do:

Track your credit

If the Department of Education transfers your loan from one service provider to another, you should receive a notification from both your current service provider and your new service provider. But if you’re like most borrowers, you probably haven’t made any student loan payments in almost two years. So it doesn’t hurt to double-check who your current lender is and who your new one will be. If you’re not sure who your loan service provider is, log on to to find out. You can also contact the Federal Information Center for Federal Student Support (FSAIC) by phone, live chat or email.

“Track your credit, know what you owe, and update your website login,” says Farrington. “If you log on and find that you have a loan from a company you don’t know, find that company.

Update your contact information

Make sure your personal information in your account is up to date, including your home address, phone number, and email. This way you will stay up to date on your loans and the grace period from your new loan service provider.

Keep a record of your student loan information

Farrington recommends that you save or print a copy of all of your credit information, including your payment history, current credit balances, interest rates, and monthly statements. Keeping a record of your credits can help ensure that they are correct after transferring them to a new service provider.

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

It could also help you know who to contact if you are interested in discussing forgiveness, requesting a stay, requesting consolidation, or signing up for an alternative repayment plan.

Now start putting together a plan

You still have four months until the grace period for the student loan ends. However, experts recommend using this extra time to keep your finances moving and come up with a plan for resuming payments for the next year.

It looks different for everyone, but maybe that means cutting back or readjusting certain areas of spending now to have room for maneuver in your budget in 2022. It could mean researching repayment plans or creating a spreadsheet to help you plan your repayment strategy. The US Department of Education said the newest addition is the “last one,” so it’s best to stay 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 have the right repayment plan in place, know where you’re sending your payments, and possibly set up billing online so you know you’re in control.”