For the second time this month, a company that services federal student loans has announced it will not extend its contract with the Department of Education, choosing instead to focus its resources on its own private student loan product. The move from Granite State Management and Resources affects about 1 million individuals and follows a similar announcement earlier this month from the Pennsylvania Higher Education Assistance Agency.
Between GSMR and PHEAA, the two companies serviced about 10 million loans on behalf of the federal government. Already dealing with the impending end of an 18-month forbearance period on federal student loans that has been in place during the COVID-19 pandemic — a period that is set to expire on September 30 — the Department of Education must now also work quickly to find entities that will be able to start working those accounts on Jan. 1, 2022 when GSMR and PHEAA stop servicing them. Granite State is the name under which the New Hampshire Higher Education Association Foundation (NHHEAF) Network operates its loan servicing business.
“While supporting students and borrowers remains central to the NHHEAF Network’s mission, winding down its federal student loan servicing operations will provide the opportunity to deepen longstanding public service efforts in New Hampshire as well as enhance its nationwide education financing and borrower support through EDvestinU, its private student loan product,” GSMR said in a release announcing its decision.
The announcements place more pressure on Richard Cordray, the chief operations officer for Federal Student Aid, who offered assurances that individuals with loans serviced by GSMR will receive “early and frequent communications and clear guidance about what borrowers should expect.” He added that “FSA will provide strong oversight and hold servicers accountable for making sure borrowers are supported and not harmed during this transition.”
The NHHEAF was formed nearly 60 years ago and began by offering 23 students loans of $500 to attend colleges or universities.