CornerStone No Longer Services Federal Student Loans - What You Should Know
If you had loans with CornerStone, read this article to find out what that means for your debt moving forward.
CornerStone was one of many companies that collected and tracked federal student loan payments. As a federal student loan servicer, the Utah Higher Education Assistance Authority, a state government agency, oversaw its operations. However, CornerStone announced in October 2020 that it would no longer service federal student loans. All loans in CornerStone’s portfolio were transferred to FedLoan Servicing.
FedLoan Servicing also will stop servicing loans after December 2021. Here’s what you need to know when your federal student loans will be transferred to another loan servicer.
What Is a CornerStone Loan?
CornerStone was one of many loan servicers that helped service federal student loans. When you took out a loan and your loan was disbursed, you were assigned a loan servicer by the U.S. Department of Education. You can determine your loan servicer by logging in to My Federal Student Aid account or calling 1-800-4-FED-AID to reach any of the loan servicer contact centers.
Remember, loan servicers are there to help you, the borrower, by providing services to help process your loan. However, they may not offer the choices that are best for you. For instance, while they’ll help you process payments, they can’t change how payments are processed, nor will they suggest the best payment method for you. That’s why you need to understand your options and take initiative.
Here are the services you can expect from CornerStone (much like other loan servicers):
- Sign up for autopay: You should be able to link your bank account so your monthly payment is taken out automatically. Doing so also lowers your interest rate by 0.25%.
- Sign up for online access: Getting online access is convenient in that you can access information about your loan anytime, pay your bills and even contact your servicer.
- Make monthly and extra payments: CornerStone or your loan servicer will collect and track your payments. For borrowers who want to make additional payments, it’s possible to apply them to the current balance instead of next month’s.
- Sign up for deferment or forbearance: You can request to reduce your payment or temporarily suspend payments if you meet the eligibility criteria. Even though you remain in good standing with your loan, interest may continue to accrue.
Do I Need to Stick With CornerStone Until I’ve Paid Off My Loans?
Since CornerStone stopped servicing federal student loans and transferred them elsewhere, you can’t stick with it. Now that FedLoan Servicing is also ending its contract, your loan will be transferred elsewhere after December 2021. It’s normal for the Department of Education to transfer federal loans from one servicer to another — it won’t affect your loan. What could be different is the new loan servicer’s customer service, but repayment options remain the same.
That being said, it’s a good idea to save your payment history and any vital documentation about your loan by downloading this information as soon as you get an announcement of a transfer. You can download statements once you log in to your online account, or you can contact your servicer to request copies.
It’s also a good idea to update your contact details, including your phone number, email and mailing address, so you will be notified about any updates or changes. Unless you decide to switch loan servers on your own — by going from a federal lender to a private lender — you’ll most likely stick with your current servicer.
What If I Want to Switch Loan Servicers?
The only way to switch loan servicers is by refinancing. Federal student loans offer plenty of benefits, but there may be instances where you want to refinance. Given the low rates for private student loans, it’s tempting to refinance to help you save thousands of dollars throughout the lifetime of your loan. Before you make a decision, though, you should consider the pros and cons.
Once you refinance your federal student loans, you’ll lose access to government programs, including student loan relief that lets you pause loan payments interest-free, as well as the various repayment plans offered. For instance, private lenders won’t have income-driven payment plans, at least not in the same way the federal government does.
What we’re saying is think long and hard before you decide to switch over.
Now, if you have existing private student loans (or you’re OK with losing federal student loan benefits), considering refinancing is a smart choice if you can lower your interest rate. Doing so will save you a significant amount of money in interest charges.
To start, check your credit to see if you qualify. Most private lenders want their borrowers to have excellent credit and a steady income stream. Then, shop around at different lenders to see what rates are available for your credit profile. Many private lenders allow you to prequalify to see what rates and terms you can get — doing so won’t affect your credit score, as they’ll conduct a soft credit pull.
Once you see a lender you like, you typically fill out a full application form with a hard credit inquiry, submit relevant documentation and wait for final approval. Then, the private lender will pay off your existing student loans and issue you a new loan with the agreed-upon terms.
At Juno, we understand that shopping around and trying to find the best rates can take a lot of time and effort. To help you save as much as possible on your loans, we’re doing the hard work by negotiating the lowest possible rates from private lenders — potentially even lower than what you see advertised on their websites. You can become a member for free. Learn more by clicking here.
Sarah Li Cain
Sarah Li Cain is a finance writer and a candidate for the Accredited Financial Counselor designation whose work has appeared in places like Bankrate, Business Insider, Financial Planning Association, Investopedia, Kiplinger, and Redbook. She’s the host of Beyond The Dollar, where she and her guests have deep and honest conversations about money affects their well-being.
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