Did you know that all federal student loans are assigned a student loan servicer? If you have student loans, then you likely have a servicer that is responsible for overseeing your payments and account information. These servicers are one of the companies that takes your money each month and applies it to your student account.
While it is still federal debt, these student loan servicers help to ensure on time payments with your account and also inform the lender if you are in default. With so many Americans having student loan debt, it makes sense that there are multiple servicers to manage all of those different accounts.
The Basics of Student Loan Servicers
Student loan servicers are private companies that are hired to manage all aspects of student loan accounts. Many of the student loan servicers offer other financial services alongside their student loan servicing. They are hired by the federal government, specifically the FFELP, or the Federal Family Education Loan Program. They are hired simply because the federal government does not have enough time to monitor each student debtor’s loans and repayment. It is also important to know that you cannot choose your own student loan servicer since one is automatically assigned to you by the federal government.
Not all student loans are handled by federal student loan servicers. You may have a mixture of different types of student loans, including both private loans and federal loans. Your private loans could be held by a different servicer. Remember that just because you find out your servicer once, your account may be transferred to another servicer - especially if you refinance your loans. This is why it is so important to stay in touch with your servicer so that they can notify you of any account changes, including changes in servicers.
What Do Student Loan Servicers Do?
Student loan servicers are responsible for tracking and collecting all payments made towards your student loan accounts. They can also help you when it comes to choosing the best repayment plan for your own particular financial situation. Whether you are looking for a fast track repayment plan that will allow you to pay it off with minimal interest, or you need an income driven repayment plan, they will be able to set it up so that you are able to stay on top of your payments.
Another helpful tool that student loan servicers offer is the ability to manage how your loans are paid, and in what order to reduce the amount of interest that you will pay over the life of your loans. For instance, you may want to pay off your higher interest rate loans sooner rather than later, and they can ensure that this happens for you. Your servicer may also be able to help you when it comes to applying for a forbearance or deferment of your payments. This can be really beneficial during times of hardship.
Student Loan Servicers in the Media
There are nine different student loan servicers that may service your federal student loans. They include:
- FedLoan Servicing
- Granite State
- Great Lakes
- Missouri Higher Education Loan Authority
- National Education Loan Network
- OSLA Servicing
You may notice that a few of these names are pretty familiar, and one of them is probably your own student loan servicer. There has been some talk in the media lately that the Education Secretary, Betsy DeVos, along with the Trump administration, was trying to overhaul the student loan servicing contracts and instead have one single company that managed all of the student loan accounts. The purpose behind this was to be able to create a single platform that could be used by all student debtors to manage their accounts and pay their loan payments each month.
There was a lot of controversy over this, so they have now retracted that contract bid, but still plan to do some major changes when it comes to student loan servicing. Their ultimate goal is to make it easier for student debtors to manage their accounts, while still ensuring that everything stays organized and that students have great customer service when contacting their student loan servicer. While having a single servicer doesn’t seem very likely, nor very possible given the $1.4 trillion worth of student loans.
DeVos, however, is still pretty confident that they will find a way to make the system run a bit better. She is quoted as saying this, “By starting afresh and pursuing a truly modern loan servicing environment, we have a chance to turn what was a good plan into a great one.” Only time will tell if it will work out any better than the current system in place.