Recently, many borrowers have received unexpected news about their student loans transitioning from Nelnet to Sloan Servicing. This change can raise numerous questions, from payment adjustments to the implications for loan forgiveness. Understanding this transition’s intricacies is vital for effectively managing your student loans. In this comprehensive guide, we’ll explore what Sloan Servicing means, the impact on your loans, and the steps you can take to ensure you’re on track for loan forgiveness.
Table of Contents
- Understanding Sloan Servicing
- Why Your Loans Were Transferred
- What You Can Do If Your Loans Are with Sloan
- The Benefits of Consolidation
- Accessing Your New Sloan Account
- Recap and Final Thoughts
Understanding Sloan Servicing
Sloan Servicing is a new division created by Nelnet to manage certain federal student loans. This transition may feel confusing, especially if you didn’t authorize any changes. However, knowing that this shift is a standard procedure, not an error, is essential. Nelnet, one of the largest student loan servicers in the U.S., established Sloan to handle commercially held Federal Family Education Loans (FFEL).
These loans are distinct from those directly owned by the Department of Education. If your loans have moved to Sloan, it indicates that you have commercially held FFEL loans, which come with specific limitations regarding federal benefits and repayment options.
Why Your Loans Were Transferred
The primary reason for the transfer to Sloan Servicing is the classification of your loans. Previously, Nelnet serviced two types of loans: those owned by the Department of Education and those owned by banks or guarantee agencies. The latter, which includes your FFEL loans, does not qualify for certain federal benefits. If your loans are now with Sloan, you may have access to different repayment options and forgiveness programs available to borrowers with Department of Education-owned loans.
Implications of Commercially Held FFEL Loans
Commercially held FFEL loans are eligible for some income-driven repayment options and forgiveness, but they lack access to critical benefits such as:
- Public Service Loan Forgiveness
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
- New SAVE plan benefits
This limitation can lead to higher monthly payments and extended waiting periods for loan forgiveness compared to borrowers with federal loans owned by the Department of Education. It’s understandable to feel frustrated by this situation, especially since you didn’t choose these loans.
What You Can Do If Your Loans Are with Sloan
Fortunately, there are steps you can take to regain control of your loans and access federal benefits. The most crucial action is to submit a consolidation application for your loans serviced by Sloan. This process involves converting your commercially held FFEL loans into a Direct Loan, which the Department of Education owns.
Steps for Loan Consolidation
To ensure you are eligible for the benefits associated with Direct Loans, follow these steps:
- Gather your loan information.
- Complete the consolidation application.
- Submit your application before April 30th.
By consolidating your loans, you can access the new SAVE plan and the one-time payment account adjustment program. This program allows you to receive credit for time spent in repayment and specific periods of forbearance and deferment, which can significantly expedite your path toward forgiveness.
The Benefits of Consolidation
Many borrowers hesitate to consolidate due to concerns about potential interest increases or higher monthly payments. However, the long-term benefits of consolidation often outweigh these initial drawbacks. Here are some advantages:
- Access to Direct Loan benefits
- Eligibility for forgiveness programs
- Potentially lower overall payment amounts
After consulting with numerous borrowers, the potential increase in interest and monthly payments is minimal compared to the long-term savings and benefits associated with loan forgiveness.
Accessing Your New Sloan Account
If you’re experiencing issues accessing your new Sloan account, there are a few steps you can take. Both Nelnet and Sloan have stated that your old Nelnet login should work for the new Sloan site. If you encounter problems, consider the following:
- Contact Sloan customer service.
- Reach out to the Federal Student Aid customer support team.
- File a complaint with the Consumer Financial Protection Bureau if necessary.
Additionally, you can verify your loan status by logging into your account on studentaid.gov. This will allow you to confirm the transfer of your loans from Nelnet to Sloan and view any other federal loans you may have.
Recap and Final Thoughts
Quick action is crucial if your loans have been transferred to Sloan Servicing. While you may not access the same federal benefits as other borrowers, consolidating your loans by April 30th can significantly impact your repayment journey. The consolidation process will open doors to new repayment options and forgiveness programs, helping you regain control over your student loans.
Don’t hesitate to explore your options and seek assistance if needed. Whether through customer support or consulting with a professional, resources are available to help you navigate this transition. Remember, you are not alone in this process; taking proactive steps can lead to a brighter financial future.
