Great Lakes Loans: What Happens When They Dissolve?

Great Lakes Educational Loan Services was a Wisconsin-based loan servicer for federal and private student loans. In 2018, the company was acquired by Nelnet, another federal student loan servicer. While Great Lakes and Nelnet handled loan servicing separately initially, the transfer of loans from Great Lakes to Nelnet began in March 2022, with an expected completion date of June 2023. This transfer process was initiated when the U.S. Department of Education decided not to renew Great Lakes' contract to service federal student loans in 2020.

Great Lakes ceases to service student loans, transferring them to Nelnet

Great Lakes Higher Education Corp. serviced federal loan debt by collecting and tracking payments. However, in 2018, the company was acquired by Nelnet, another federal student loan servicer. Despite the acquisition, both companies continued to handle loan servicing independently of each other.

In 2020, Nelnet and Great Lakes' contracts with the Department of Education were not renewed, and their servicing contracts expired on December 14, 2020, with two optional six-month extensions through December 14, 2021. The decision was part of the U.S. Department of Education's efforts, led by Education Secretary Betsy DeVos, to improve student loan servicing and hold contractors accountable for their performance.

The transfer of loans from Great Lakes to Nelnet began in March 2022 and was expected to be completed by the end of June 2023. Great Lakes borrowers were to be notified two weeks before their account transfer date. Once the transfer was complete, borrowers would receive a notification from Nelnet and be provided with a new federal student loan account number. Great Lakes would continue to forward payments to Nelnet for at least 120 days after the transfer, but borrowers were required to set up new online accounts with Nelnet.

With the transfer, borrowers could request income-driven repayment plans from Nelnet, which would limit their student loan payments to a percentage of their income. Nelnet could also help borrowers process deferment and forbearance requests, temporarily stopping or reducing payments to avoid default.

Great Lakes erroneously reported debts to credit bureaus, causing a dip in credit scores

Nearly 5 million borrowers with federal student loans serviced by Great Lakes may have seen their credit scores dip. This was because their debts were erroneously reported to the major credit bureaus during the automatic six-month forbearance that began in March 2020. Due to a coding error, paused payments were reported as "deferred" instead of being reported as if the payments had been made. If borrowers were current when forbearance began, the status should have been reported as "current".

While deferred status is not a scoring factor under FICO credit scoring formulas, which are the most commonly used to make lending decisions, it can lower the credit scores generated by VantageScore formulas. These are the scores most commonly offered for free to consumers as a way to track their credit history.

Great Lakes has stated that it is working with credit reporting agencies to correct these inaccuracies. In the meantime, borrowers can take steps to protect themselves from the negative impact of this error on their credit scores. This includes regularly checking their credit reports and disputing any inaccurate information, as well as contacting Great Lakes or the credit bureaus directly to resolve any discrepancies.

Great Lakes Higher Education Corp. is one of several companies that service federal loan debt by collecting and tracking payments. The company is in the process of transferring its portfolio to Nelnet, another federal student loan servicer. This transfer started in March 2022 and is expected to be completed by the end of June 2023. Borrowers whose loans are being transferred will be notified two weeks before their transfer date and will receive another notification from Nelnet once the transfer is complete.

Great Lakes provides entrance and exit counselling, repayment plans, and information on scholarships and grants

Great Lakes is a company that previously serviced federal loan debt by collecting and tracking payments. However, it is no longer servicing loans as of 2023 and has transferred its portfolio to Nelnet, another federal student loan servicer. Despite this change, Great Lakes still provides resources to help students understand their loans and repayment options.

Entrance and Exit Counselling

Great Lakes encourages students to complete student loan exit counselling when they are no longer enrolled at least half-time. This counselling helps students understand their rights and responsibilities as borrowers, the different repayment plans available, and their options if they cannot make payments. It is important for students to understand that their loans should be taken seriously and that they should only borrow what they need for educational expenses.

Exit counselling provides essential information about loan repayment. During the session, borrowers verify their total debt, determine the best repayment plan for their situation, learn about deferment and forbearance options, and provide updated contact information.

Repayment Plans

Great Lakes directs students to StudentAid.gov, where they can keep track of who they owe and how much they owe. Students can see a listing of each of their loans, the total amount of each type of loan, and the total for all their loans. They can also view their grants, which do not need to be paid back.

Scholarships and Grants

Great Lakes also informs students about grants, which, unlike loans, do not need to be repaid. Students can view information about their grants on StudentAid.gov, along with their loan details.

Great Lakes is acquired by Nelnet in 2018, and the latter now services all outstanding Great Lakes student loans

Great Lakes Educational Loan Services, Inc., a student loan servicing company, was acquired by Nelnet in 2018. Nelnet, a diversified and innovative company, offers educational services, technology solutions, telecommunications, and asset management. The acquisition of Great Lakes was a natural progression, as the two companies had already been working together for almost two years to develop a state-of-the-art servicing system for government-owned student loans.

The joint venture between Nelnet and Great Lakes aimed to create a single platform for government-owned loans, which would enhance borrower experiences and provide better administrative efficiency for schools. The platform was designed to utilize modern technology to manage the volume, protect customer information, and support borrower initiatives.

The acquisition cost Nelnet $150 million in cash for 100% of Great Lakes' stock. At the time of the acquisition, Great Lakes had approximately 1,800 employees and was headquartered in Madison, Wisconsin. They previously served as the technology provider and student loan servicing company for the Great Lakes Higher Education Corporation & Affiliates.

As of December 31, 2017, before the acquisition, Great Lakes serviced a significant amount of loans, including $224.4 billion in government-owned student loans, $10.7 billion in Federal Family Education Loan Program loans, and $8.5 billion in private or consumer loans. The transfer of loans from Great Lakes to Nelnet began in March 2022 and is expected to be completed by the end of June 2023.

Great Lakes borrowers can expect to be notified two weeks before their loan is transferred to Nelnet. Once the transfer is complete, borrowers will receive a new federal student loan account number from Nelnet, and Great Lakes will forward payments to Nelnet for at least 120 days after the transfer. Borrowers will need to set up a new online account with Nelnet after their loan transfer.

Great Lakes did not lend money, but managed payments, sent statements, and processed payments

Great Lakes is a federal loan servicer that manages payments for student loans. It does not lend money but provides day-to-day services such as sending out billing statements, processing payments, and keeping track of loan balances. It also offers additional services like entrance and exit counseling, loan repayment plans, and information about scholarships and grants.

Great Lakes is in the process of transferring its portfolio to Nelnet, another federal student loan servicer. The transfer of loans from Great Lakes to Nelnet started in March 2022 and is expected to be completed by the end of June 2023. If you are a Great Lakes customer, you will be notified two weeks before your transfer date. Once the transfer is complete, you will receive a new federal student loan account number from Nelnet.

Great Lakes will continue to forward payments to Nelnet for at least 120 days after the transfer date. However, you must set up a new online account with Nelnet after your loan is transferred. You can contact Nelnet through phone, online form, social media, mail, or fax.

As a borrower, you can access your account on mygreatlakes.org to view information about your loans and repayment options. You can also sign up for Auto Pay, where Great Lakes will automatically withdraw your payment each month. The monthly billing statement includes your loan balance, payments made to date, and upcoming payments.

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