CornerStone Education Loan Services was once a major loan manager for the US Department of Education. But in 2020, the company suddenly canceled its contract with the Education Ministry, leaving 1 million borrowers in limbo. If you had a CornerStone loan, here’s what you can expect when transferring.
What happened to CornerStone Education Loan Services?
The Ministry of Education is not directly involved in the management and reimbursement of federal student loans. Instead, it contracts with loan service companies like Navient, Nelnet and Big lakes, among others. When you graduate, your loan is assigned to one of these managers who helps you manage your loans until you have paid them off.
CornerStone was one of the few companies approved to handle federal student loans. It is managed by the Utah Higher Education Assistance Authority (UHEAA), although it has managed loans across the country. CornerStone was originally contracted to service federal loans until 2022, but ended its contract in October 2020 due to financial losses. Its website no longer exists and all loans have been transferred to FedLoan Servicing.
What will happen to my CornerStone Education Loan Services?
If you were one of the 1 million borrowers with a CornerStone loan, your loan was transferred to FedLoan Servicing, another federal student loan manager. FedLoan – operated by the Pennsylvania Higher Education Assistance Agency – is currently under contract with the Department of Education until December 2021. This means you might encounter another loan transfer soon.
Even if you are transferred to another loan manager, it does not cost you anything and all your loan details will remain the same. You will still be able to track your loan information, manage repayment, and potentially reap additional benefits. For example, your new service agent may have an automatic payment discount option available, which saves you money on interest each month if you set it up.
You will know that your loan is transferred when you receive an email from your new service agent regarding the transfer. You will receive a welcome letter detailing the actions to be taken, such as registering online and setting up payment information. If you do not know which company is your loan manager, you can consult the Federal Student Aid website or look at your credit reports.
Can I change my loan officer?
You generally cannot change the loan manager assigned to you, with a few exceptions. If you are applying for a Direct consolidation loan in order to combine all of your existing federal loans, for example, you can select a manager to manage your new loan.
You can also change loan officers when you refinance your student loans. Refinancing transfers all of your federal loans to a private loan, giving you new loan terms and a new interest rate. Refinancing is done through private lenders, so once you refinance you lose all of your federal protections like income-based repayment and forbearance. Once completed, you cannot go back. But it gives you a new student loan manager.
That said, consolidation and refinancing aren’t the best options for everyone, so switching may not be an option. If you have any complaints about your service agent, you can file them with the Consumer Financial Protection Bureau (CFPB) or your attorney general’s office.
The bottom line
If you had loans managed by CornerStone Education Loan Services in the past, you have already received a new loan manager at this point, and your payments will continue as normal. You can also talk to your new loan manager about your repayment options, income-oriented repayment plans, forbearance, or utility loan forgiveness. If you have any questions about the transfer, you can always call your new repairer directly for more information.