May 20, 2026
Ever since COVID-19, things around federal and private student loans have gotten more complicated and confusing.
The U.S. government gave people carrying federal student loans a break during COVID, pausing payments on the loans and setting interest rates at 0%. This was the first move in what became multiple forbearance extensions and rule changes from the government (1).
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Private lenders weren't required to follow the same forbearance rules as the U.S. Department of Education during the pandemic, though some did (2). The different rules not only between the government and private lenders but between private lenders themselves has left many Americans confused.
One Redditor with a private loan with Navient posted that they had defaulted on their payments in 2008 but subsequently set up automatic loan payments with their bank to prevent any future defaults.
The auto-withdrawals continued into the COVID-19 pandemic, then "suddenly stopped," leaving the Redditor — milkmanrichie — assuming it had something to do with the loan forbearance (3).
"They never resumed taking money out of my account," he posted. "Then [the student loan] disappeared off my credit report about a year or 2 ago. Just got a letter and a text message from General Revenue Corporation looking to collect."
He's concerned about his defaulted payment showing up on his credit report again (4), along with the collection demand.
So what happened? And can a private lender have the right to take legal action and demand repayment in this case (5)?
Private and federal loans changing hands
Navient used to service both federal and private student loans for 12 million borrowers (6). But it got out of the student loan business.
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It sold General Revenue Corporation to Single Point Group International in 2019 — prior to the pandemic (7).
Meanwhile, the Consumer Financial Protection Bureau (CFPB) sued Navient, arguing that the company failed to inform borrowers about income-driven plans, misallocated payments and hurt borrowers' credit reports (8).
As a result, in 2024, Navient was permanently banned (9) from servicing federal student loans and had to pay the CFPB $120 million to compensate student loan borrowers. That same year, Navient transferred its remaining public and private student loans to another servicer, MOHELA (10).
The Redditor was likely experiencing the complications and mixups of Navient transferring student loans to new companies and servicers.
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For example, in the loan-transfer process, a student loan might temporarily be marked as "paid in full" on your credit report, but it doesn't mean it is. It just needs to be uploaded onto the new system.
There may be errors in your credit report during the transfer, so it's a good idea to dispute credit report errors directly with credit reporting agencies (11).
Meanwhile, auto-withdrawals generally stop — but that doesn't mean you don't owe money. You have to set up auto-payments again with the new servicer (12).
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Have student loans? How to avoid complications
If a borrower hasn't been paying their student loan, a servicer like General Revenue Corporation has legal authority to collect unpaid debt.
If you're confused about what you owe, call your student loan servicer to check in. Ensure you're up to date on your payments and enrolled in the best repayment plan.
It may be an annoying task on the to-do list for now, but it could save you money, trouble and even legal repercussions later.
Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
U.S. Congress (1),(2); Reddit (3),(4),(5); Consumer Financial Protection Bureau (6),(8); Greenberg Advisors (7); Politico (9); Navient (10); Federal Student Aid (11); myFICO (12)
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Laura Grace Tarpley is a contributing reporter for Moneywise who has been covering personal finance and working in digital media for 10 years. Her expertise spans banking, investing, retirement, loans, mortgages, and taxes.
