Can You Change Your Student Loan Servicer?

A student loan servicer is the company that handles your student loans on behalf of the federal government. Borrowers are not able to choose their student loan servicers. Instead, the United States Department of Education assigns a servicer to your loan after it is granted and disbursed.   After this first payment is made, the student loan servicer will provide you with information about the terms and conditions of your loan, including when your payments are due and options for repayment plans.

How Many Student Loan Servicers Are There?

There are a number of student loan servicing companies that work with the Department of Education, and you may find that the servicer changes more than once over the course of your loan. You may even find that if you have more than one federal student loan, it is serviced by more than one company.

You can determine what company services your federal student loans by logging onto the National Student Loan Data System and entering your identification number.  Once you have determined which company — or companies — are servicing your federal student loans, you can then create an account directly through their websites to track your student loans.

Why Would You Want to Make a Switch?

Many borrowers have been incredibly unhappy with their student loan servicing companies, as evidenced by the number of complaints received by the Consumer Financial Protection Bureau over the past year. Issues ranged from payments not being processed, to being harassed by collectors, to complaints about customer service. If you are experiencing problems with the company servicing your federal student loan, what recourse do you have?

Can You Make a Switch?

As a general rule, you cannot change your student loan servicer. However, if you are consolidating your federal student loans, you will be able to choose your student loan servicer.  Consolidation is when you essentially replace many smaller loans with one large loan. This may not save you any money or lower your interest rate, but it could make your life easier in terms of dealing with federal student loan repayments. That is the only way that you will be able to choose or change your federal student loan servicer.

How to Consolidate Your Loans

The process is relatively simple; you simply go online to the Department of Education website and log in with your identification. You will then complete an application form, choosing a new repayment plan and loan servicer. A tool on the website called the Repayment Estimator will allow you to see how much you will pay each month under the different repayment plans. Importantly, you should only consolidate your federal student loans through this website; never respond to email solicitations, pop-up ads, or letters. Consolidation through the government is free, so you should never be charged a fee to do this.

Changing your student loan servicer is relatively easy to do — but it can only be done if you are consolidating your loans. Consolidating student loans can remove certain protections, and it can end up costing you more money by the end of repayment. Carefully weigh your options before deciding to do so, as there are advantages and disadvantages of consolidation. If you are having difficulty with your student loan servicing companies and want to change, however, consolidation may be something to consider.

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