My student loan servicer changed without my knowing. It may happen to you, too — here's what to do

At first, I thought it was another scam.

A company I'd never heard of sent me an email on Aug. 15 notifying me that it is my new student loan servicer. It was the first I was hearing of the change. Since I finished graduate school in 2017, my servicer has been Nelnet.

"The U.S. Department of Education (ED) authorized the transfer of your federal student loan(s) from Nelnet to CRI," the message said.

I searched through my emails to see if I'd missed a message about the transfer of my loans, but I couldn't find one. Finally, I realized that I had received notice of the upcoming change in my Nelnet account inbox (which I don't remember ever checking). The letter was posted in mid-July.

After I created a new account with CRI, or Central Research, Inc., as the message instructed me to do, I panicked when I saw that my loans had been placed in an administrative forbearance. I'd never requested that my loan payments be put on pause, and I've written extensively about how costly these reprieves can be, thanks to the accrual of interest.

I couldn't figure out how long my loans were in that status, and why my next due date wasn't until the end of October.

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Other borrowers are also reporting their student debt has recently been transferred, with similar headaches, said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program in New York.

"CRI is a relatively new servicer, and it seems that ED is slowly transferring accounts from other servicers to them," Nierman told me.

The U.S. Department of Education contracts with different companies to service its over $1.6 trillion federal student loan portfolio, including Mohela, Nelnet and EdFinancial. It pays the servicers more than $1 billion a year to manage roughly 42 million borrowers' accounts, according to higher education expert Mark Kantrowitz.

I spoke to experts about what borrowers — me included — should know and do if their federal student loans are transferred from one company to another.

The U.S. Department of Education, Nelnet and CRI did not respond to a request for comment.

Student loan borrowers should screenshot and download important information about their accounts from their servicer and with Federal Student Aid on a monthly basis once notified that their servicer will change, Nierman said.

Specifically, Nierman advises getting proof of your loan balance, interest rate, payment status, payment history and any important notifications in your servicer account inbox. (That means actually checking that inbox, which I failed to do.)

But what if you learn about the transfer of your student loans only after it has already happened, as I did? Fortunately, I was able to log in to Nelnet and still access my loan details and payment history. I've saved all that data, now, and will be on the lookout for any discrepancies.

"Nothing about your loan details, payment history, eligible payment plans or forgiveness programs should change just because your loans are transferred to another servicer," Nierman told me.

"But administrative mistakes happen, and keeping your own records gives you ammunition to spot and dispute an error if it occurs," she said.

I learned it is often standard procedure for servicers to place student loans into an administrative forbearance — as mine were — during a transfer. Many borrowers' loans are put into the status for up to 60 days until the change is complete, said Kantrowitz.

"The reason for an administrative forbearance is to ensure that a borrower isn't marked delinquent if their payments didn't go to the right servicer," he said.

During the forbearance, interest will continue to rack up on your debt. But unlike with a general forbearance, you will likely continue to get credit for any forgiveness programs you're pursuing, Kantrowitz said.

It was the interest charges I was concerned about. As a result, I quickly made my usual student loan payment to my new servicer even though my bills were paused. I may not have done that after my reporting for this story.

Borrowers whose loans are being transferred "can try making payments, but it is risky," Kantrowitz told me. "The payment may get lost."

That's because your loans are in a limbo state during a loan transfer, he said.

"The old servicer is no longer accepting payments, and the new servicer may not be fully set up yet with their loans."

To avoid any mix-ups, Kantrowitz recommends that borrowers set aside their usual student loan bill amount and then make their payments once their new account is live.

Meanwhile, an administrative forbearance on your student loan account should not affect your credit, he said.

"Nevertheless, borrowers should check their credit after the forbearance is over, to make sure they weren't accidentally reported as being late with a payment," Kantrowitz said.

Lastly, you'll want to make sure your new student loan servicer has your current information and that all the details are accurate, experts said. Check the monthly payment amount, total balance, interest rate, mailing address and contact information listed by your updated servicer.

If you were enrolled in automatic payments with your previous servicer, which usually leads to a small discount on your interest rate, you may need to reenroll, Kantrowitz said.

To contact your new servicer, you can find a list of the companies at Studentaid.gov, along with their phone numbers.