- If you have a student loan with a lender who is closing, you still need to make payments on the loan.
- Make sure to check your mail or email from your old lender to find out what, if any steps, you need to take next.
- Your old lender will likely sell your loan to a new 3rd party, and that is where you will continue making loan payments.
Companies regularly change their service offerings, and student loans are no different. Occasionally, lenders do decide to stop offering student loans to students.
So what do you need to do if your lender closes? Here’s what you should expect.
What Should You Do If Your Lender Closes
For those who hold student loans from a company that closes their student loan department, the next steps may be confusing at first. However, in most cases, the lender will explain what is required of the borrower going forward.
In almost all cases, the borrower will continue paying the loan, but the company they are paying will change. If a student borrowed from a lender who is closing, once the sale of the student loans is completed, the borrower will instead be repaying their loan through the new third-party provider.
Students should never simply stop paying the loan because the loan changed hands. This could set you up for some serious consequences including late fees, increased debt, and defaulting on the loan.
If you are not quite sure what to do when your lender closes or who to pay, be sure to first review any emails or letters you received concerning the sale. These documents should outline your next steps.
If you have not received any information, reach out to the initial lender to see who you should contact going forward. You don’t want to skip payments simply because you haven’t received any information – this could set you up for some problems down the line.
Exploring Other Student Loan Options
Understanding your options for student loans, especially if your lender is closing, is essential to making the best financial decisions for your wallet.
What If You Were Going to Borrow from a Lender Who is Closing?
Students who had planned on borrowing from a company that is closing will have to search for another lender. Thankfully, there are several other options available to students who need private student loans.
If you’re struggling to find a loan that fits your needs for college, College Raptor’s Student Loan Finder can help you explore your options and apply!
Your Options for Repaying Student Loans
If your lender closes and you’re having trouble repaying your student loans, it doesn’t mean you’re out of options. Refinancing and deferment may be two options available to you even if you had a student loan through a lender who is ceasing student loan operations.
Refinancing allows you to negotiate your loan terms with another lender. And deferment may be available with some lenders, but not all, and only under certain conditions. You will want to talk to lenders about your options and explore rates for refinancing before making a decision here.
So, if your current lender may be closing the doors on its private student loan offers, that doesn’t mean that you can simply stop paying your debt. The loans will simply switch hands to another company. Be sure to check your email and mail for any updates about lenders who may be closing so you know exactly who to pay, how, and when.
You might want to explore your refinancing options. Through College Raptor, you can see the rates you may qualify for! It’s easy to get started, too – see about refinancing right here.
