When you take out federal student loans, you don’t get to choose the servicer.
However, the federal student loan servicer that’s assigned to you by the Department of Education can have a huge impact on how you manage your student debt. If you run into a lot of issues with your servicer, it can be a big problem.
In fact, poor student loan servicers can be a source of significant stress for borrowers, according to the Consumer Financial Protection Bureau (CFPB).
A 2017 CFPB report analyzed more than 44,000 student loan complaint calls from September 2015 to April 2017. The study found that 64 percent of the calls were about “problems consumers experience when dealing with their student loan servicer.” This includes poor customer service, problems processing payments, and unnecessary obstacles to enrolling in alternative repayment plans.
But you don’t have to stay with a bad federal student loan servicer. You have other options that can help you find a servicer that’s right for you – and refinancing your student loans is one way to do it.
Find a student loan servicer that meets your needs
Student Loan Hero CEO, Andrew Josuweit, has been there. After dealing with several student loan issues, including an accidental default, he was more than disappointed with his experience:
To be honest, I was just pissed off and sick of being with my student loan servicer. I wanted a good customer experience. When I’d talked with my servicers, they didn’t listen to my personal situation.
Refinancing student loans is one way to get rid of a federal student loan servicer you hate, without having to repay your debt in full. For Josuweit, he refinanced some of his student loans and selected a servicer that was a better fit for his needs.
Student loan refinancing can have other perks, too. You might get a lower interest rate or lower payments in the process. Follow these steps to refinance your student loans and find a servicer you’re happy with.
1. Figure out what you want in a servicer
You probably have a good idea of what you don’t want after dealing with poor student loan servicers. Use that as a starting point to identify which student loan servicer features are important to you.
Depending on your needs, you might be looking to gain any of the following through student loan refinancing:
- Excellent customer service
- Fair and transparent repayment policies
- Unemployment protection, deferment, or forbearance options
- Option to refinance with a cosigner
- Flexible underwriting and credit requirements
- Loan term options that match your repayment goals
- Lowering your student loan interest rate
Make sure you put together a wish list of features you want in a servicer before you start shopping for the best options.
2. Vet student loan refinancing companies
Now that you have an idea of what you want, you can research student loan refinancing companies that potentially meet your needs.
You can start by using the Student Loan Hero refinancing marketplace to find trustworthy companies and get a preview of their terms. Visit their sites and read up on their student loan features.
Many refinancing companies provide plenty of information on their sites clarifying their student loan refinance rates and terms. They may mention other features they offer, such as repayment assistance or refinancing with a cosigner.
It can also be a good idea to contact the ones you’re interested in. You can get direct answers to your refinancing questions while also taking their customer experience for a test drive.
Take note of the customer service representative responsiveness, how long you’re put on hold, and other indicators of good (or poor) customer service.
Lastly, make sure you read in-depth reviews of the refinancing companies you’re considering. Reviews can give you an excellent idea of what kind of service you can expect.
You can also check out customer reviews to see what types of experiences other people have had. These can often alert you to potential red flags.
3. Select the best refinancing terms
Refinancing gives you the control to find a student loan servicer that works with your current financial situation. In addition to choosing a new servicer, you can choose new student loan terms that fit your needs, including your interest rate and length of repayment.
Once you choose a servicer or narrow it down to a few top picks, you can get interest rate quotes. A student loan servicer will often perform a soft credit check to generate a rate quote without affecting your credit. You can use this process to get a few quotes and see which one has the best deal for you.
After you make your final selection, you can officially apply. This involves submitting paperwork and other personal details, as well as a hard credit inquiry.
Then, when you’re approved for refinancing, your new servicer will repay your old student loan(s) and issue you a new one through them, ridding you of your old federal student loan servicer for good.
Look before you leap
Refinancing student loans can be one way to get rid of a federal student loan servicer you hate, but don’t be in such a hurry to get rid of your servicer that you rush into refinancing student loans.
You should be aware of the potential drawbacks of refinancing federal student loans, including losing access to government-backed deferment, forbearance, and repayment plans.
Though it probably shouldn’t be your only reason for doing so, refinancing can be worth it to get a better student loan servicer. No more never-ending student loan headaches. No more dead-end phone conversations with a federal student loan servicer that’s unhelpful and unresponsive; just a student loan that works for you.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Rates (APR)||Eligible Degrees|
|Get real rates from up to 4 Lenders at once
Check out the testimonials and our in-depth reviews!
|2.63% – 7.75%||Undergrad & Graduate||Visit SoFi|
|2.57% – 6.32%||Undergrad & Graduate||Visit Earnest|
|2.80% – 7.02%||Undergrad & Graduate||Visit Laurel Road|
|2.68% – 8.79%||Undergrad & Graduate||Visit Lendkey|
|2.57% – 6.65%||Undergrad & Graduate||Visit CommonBond|
|2.62% – 8.69%||Undergrad & Graduate||Visit Citizens|