My federal loans are not owned by the government

Hi All,

Crazy times here right. So amidst trying to keep payments to settle my private loans and being unemployed I found out something distressing. My federal student loans (Stafford I believe) are not owned by the Department of Education. So believing my loans were in deferral I was perplexed by Navient sending me a nasty email. I log in, my accounts are delinquent. I’m angry and I call them up. I’m told my loans are not covered by the cares act or the presidential mandate. I tell them they are federal loans, they tell me they are not owned by the DOE…Who owns them I ask…silence "I don’t know, I’d have to ask my supervisor "…What? How can they not be owned by the DOE? Ok whatever, it is what it is. But now I want to know, if I consolidate these loans (haven’t done that yet) will it put them with the DOE? Is there a way to choose the lender when I consolidate? Does anyone have any info on this weirdness? God I wish I had never gotten involved with this business…if I could return my degree I would! Thanks in advance.

-Nichole R

I have 150,000 total. My consolidated loans are also not a part of the cares act, even though they are sub and unsub. However i am a federal employee and we have the our own thing to where we can have our loans transferred out of navient, and those are grad loans which i thought were not doe loans… who the fuck knows whats happening with them. Im confused too.

Hi there,

You more than likely have FFEL loans. These loans were often used and are loans guaranteed by the government but owned and serviced by a third party loan service provider.

This means that if you default on the loans, the loan service provider (lsp) still gets their money and the doe can come after you.

FFEL loans are not included in the CARES act at all. The interest still accrues and payment is still expected.

FFEL loans were abolished in 2010 and the doe started issuing only direct loans.

I believe you can refinance the loans into a direct loan at the interest of today.

Hope that helps.

I too would return my degrees if I could. You are not wrong to be confused by this. This history really starts with Sallie Mae. I’ll spare you that part—you can read about it if you ever have insomnia. But Navient grew out of that history. The FFEL loans (is that what you have?) are owned by Navient but backed by the federal government. So they sit in a kind of gray area between public and private. I say gray area, because Navient has a long history of claiming they are public when it benefits them and private when it benefits them. Technically, Navient owns them—and those are just the broad strokes of this thing. So the drag of this is that if Joe Biden were to forgive all federal loans on day 1 (of course there’s a Santa!), it would not include these FFEL loans nor would it include FFEL consolidated loans nor FFEL joint spousal loan consolidations. But, Biden could “buy” them since they are already backed by the government. (it isn’t really buying them, nor is it costing something off the ledger, but that is another issue). In other words, it would be NBD for Biden to do this, but I really don’t see why he would as Navient has bent over backwards to protect these FFEL loans even after they were discontinued because they are so valuable to Navient. (think lots of billions) So now that these loans are no longer offered to anyone else, they didn’t just offer the same benefits to these FFEL borrowers- they let them rot in the hell that is the FFEL loan with no relief. Now, you can ask to have your FFEL converted to a Direct Loan, which would offer you Covid relief, but there may have been a deadline on that. Also- you can’t convert to a Direct Loan if you have a consolidation UNLESS you state that you are seeking PSLF specifically and one or two other programs (someone help me with this) . In the case of PSLF, you have to make sure you use the correct servicer, or you won’t get credit. But the real point is, it is beneficial to have that federal label on your loan if you can get it back, regardless of the PSLF. Now if you are a joint consolidated loan FFEL borrower, you are completely out of luck. This is only subgroup that is NOT allowed to convert to a Direct Loan and all of its relief options right now. (and this is why we are working on a lawsuit that argues discrimination under the ECOA by marital status. – we are also working on issues with the FFEL in general. So I hope that helps you. Navient has lied to me many times on the phone. If I didn’t cover your question, feel free to ask… cheers!

I want to hear more about the benefit of federal employees getting to move their loans from Navient. Please share with us about this. Thanks!

Great breakdown!

I don’t see how these loans are claimed to be federal (told to the American people) but yet are pretty much private loans that are serviced by multiple banks or lsp like Navient.

When I started my BD, it was eye opening to know that I actually had 2 dirty hands in the cookie jar owning my loan, a bank and EDMC.

It’s crazy that the govt can get away calling these federal loans when in fact, they are not. If one does receive a discharge for BD, they DOE is requiring FFEL holders to refi into direct loans in order to revive the discharge. Could that be because the lsp would get paid anyway?

It’s shady.