Cornerstone Student Loans has been in the non-profit business of providing quality student loans since 1982. Unlike private student loan companies which focus more on their shareholders and the bottom line, Cornerstone is dedicated to helping students finance their secondary education.
Contracted by the Department of Education as a student loan servicer, Cornerstone is one of nine national companies managing the daily activity of federal student loans. It's entirely possible that you have already worked with Cornerstone during your student loan experience. They strive to provide their customers with accurate and timely information on the best practices in sourcing and repaying debts.
Cornerstone's core values aim to provide guidance through the financial aid process, education about how to save for school, and conscientious service to all their clients. According to their mission statement, “Student success in financing and completing their educational goals fulfills our mission.”
Initially, borrowers are automatically set up with one of the federally approved servicers. Although many people may already work with Cornerstone, others can apply for reassignment if they would like to switch to them. Under certain circumstances, which are reviewed below, it might be beneficial to make the switch.
Automatic Repayment Benefits
For those former students who feel confident they will be able to set up and maintain automatic payments for the foreseeable future, Cornerstone offers a reduction of 0.25 percent to annual interest rates. While a quarter of a percent may not seem like much initially, over time it can lead to serious savings. Even with a small ten-year loan of $20,000, the reduction in interest rate could result in hundreds of dollars in savings.
For those interested in applying for the rate reduction, more information is available through the Cornerstone website, including an application form.
Armed Services Benefits
For members of the armed forces, Cornerstone has a dedicated set of benefits specifically catering to their circumstances. These benefits include offering deferment during deployment and also post-deployment if the service member has decided to go back to school. Another advantage offered is a reduced interest rate during periods of active duty.
Because Cornerstone is a branch of the federal government, they try to provide as much benefit as possible to people in the armed forces. Other programs they offer help soldiers who may require forgiveness services. These services include forgiveness in the case of total and permanent disability due to an accident or illness during service. They also offer discharge based on public service. The latter comes into play after ten years of continuous service in the public sector and ten years of consistent repayment.
While former students will not be able to refinance their student loans through Cornerstone, they may be able to consolidate their student loans into one monthly lump payment. Having one simple payment is often easier for borrowers to manage on a long-term basis, despite the fact that it doesn’t reduce interest rates overall. Typically, consolidated interest rates are determined by a weighted average of all the various combined student loans.
Changes to Federal Student Loan Servicers
Recently, under the direction of Secretary Betsy DeVos, the Department of Education made changes to the way student loan servicers were monitored. In early September 2017, the Department cut ties with the Consumer Financial Protection Bureau (CFPB) which had previously been in charge of overseeing federal student loan servicers. The CFPB was responsible for complaints against servicers from borrowers, handling over 20,000 complaints since February 2016 alone.
This change was on top of a move earlier in the year by the Department which attempted to cut all but one contract with national student loan servicers. This change would have significantly impacted the profitability of Cornerstone, perhaps even leading it to close its doors. However, it seems the Department is in the process of reversing this decision due to public outcry.
Under the new administration, the student loan industry is going through many changes. The long-term effects of these decisions remain to be seen. In the attempt to streamline the system, debt servicers like Cornerstone might lose federal oversight and could even be at risk of losing their federal contract altogether.