After paying my student loans for a few years, I received a letter notifying me that my student loans were being transferred to another loan servicer. What? Whyyyy?
Even though I didn’t particularly love my student loan servicer, I had absolutely no choice in the matter and experienced very little support when my largest financial obligation switched hands in a blink. I wasn’t sure what to expect. But now that my loan servicers have changed twice, I know what to do.
If you’re in the same situation, follow these steps to transition to your new loan serving company smoothly.
What Is a Student Loan Servicer?
A loan servicer is a company that manages your student loan payments. Your loan servicer is assigned to you by the U.S. Department of Education, so you can’t “shop around” for the best loan servicer. You deal with what you’re given, for better or worse.
Currently, there are 10 student loan servicing companies that manage student loan repayment and act as a liaison between borrower and lender.
What to Do When Student Loan Servicing Changes Hands
A change in loan servicers could signify some behind-the-scenes business from your current loan servicer. It could also be a move on behalf of the Department of Education, which is making an effort to aid borrowers with more than one loan servicer by transferring their loans so they only have one servicer to deal with.
A student loan servicer change can also occur if you are participating in the Public Service Loan Forgiveness Program. All loans through that program are managed by FedLoan Servicing.
If you are unsure of who your loan servicer is, you can retrieve your federal loan information through the National Student Loan Data System. For private student loans, borrowers can check their credit reports at AnnualCreditReport.com to find out.
Step 1: Stay up-to-date by reading your notifications.
I’m the first to admit that for a long while, I collected student loan letters and emails and never read them. I’ve always made on-time payments and learned quickly that most of the notifications were simply payment reminders. However, your loan servicer will notify you months in advance about a loan servicer switch, so it’s important you actually read your notifications.
Be sure your contact information is up-to-date — you may have an old email or your parent’s address on your account. Make sure everything is up-to-date so you can stay in communication with your current loan servicer and be notified of any changes.
Step 2: Create an account with the new loan servicer.
If your loan servicer is changing, you will receive a welcome letter from your new loan servicer that includes contact information and supporting materials. Your loans will be switched over to your new loan servicer automatically, but you’ll need to create a new account with your new loan servicer in order to manage payments and stay in touch online.
Go on to your new loan servicer’s website and create an account. Typically, this involves creating a username and password, as well as entering your personal information to match you to your loans.
Once you create an account, save your password, as well as documentation about the loan transfer and the welcome letter, somewhere safe. You’ll want to have those for reference later on, if need be.
Step 3: Update your payment information.
While your loans are transferred automatically to your new student loan servicer, it doesn’t mean your payment information will be. You may need to re-input your bank information and set up your payment preferences.
You don’t want to miss a payment because autopay wasn’t set up with your new loan servicer or because you didn’t have updated payment information.
Step 4: Get to know your loan servicer.
You can’t choose your student loan servicer, so you might as well get to know the one you have. Some loan servicers like Nelnet have financial education resources and also allow for text message reminders. Learn the ins and outs of your new loan servicer so you can take advantage of what they offer.
While it may seem like your loan servicer is just a means to an end, they can be a great resource should you need to defer your loans or change your repayment plan.
What To Do If the Process Is Messy
The process of changing loan servicing companies can be relatively painless. You get a notification, create an account, update your payment settings, and voila — done.
Unfortunately, not all borrowers have the best experiences with loan servicer transfers. According to the Consumer Financial Protection Bureau:
“More than 10 million borrowers have had their servicer change in the past five years…When servicers change, payments may be lost, consumers may incur surprise late fees, and processing problems and missing account records can knock borrowers off track on repaying their loans.”
If you’re having issues with your new loan servicer and you’ve tried to resolve your issues with them directly, you may want to consider submitting a complaint with the Consumer Financial Protection Bureau.
The most important thing to do if you’re dealing with loan servicer changes is to stay on top of repayment and maintain your records.
Photo credit: joethegoatfarmer.com
Interested in refinancing student loans?Here are the top 6 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.89% – 5.99%1||Undergrad & Graduate|
|1.99% – 5.64%2||Undergrad & Graduate|
|1.99% – 6.84%3||Undergrad & Graduate|
|1.91% – 5.25%4||Undergrad & Graduate|
|2.25% – 6.53%5||Undergrad & Graduate|
|2.17% – 4.47%6||Undergrad & Graduate|
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1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of Feburary 1, 2021.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of October 26, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 10/26/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 02/17/2021 student loan refinancing rates range from 1.91% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.
5 Important Disclosures for SoFi.
6 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.99%-5.15% APR and Variable Rates range from 2.17%-4.47% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.