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In some cases, the Department of Education will transfer federal student loans from one servicer to another — for example, if a loan servicer will no longer manage federal loans, or if you sign up for a program like Public Service Loan Forgiveness (PSLF).
In this situation, the Department of Education will notify you by mail or email (or both) that your federal loans are being transferred. The notice will include your new servicer’s name and contact information. If this happens, it’s a good idea to check the National Student Loan Data System (NSLDS) to verify the servicer for each of your federal student loans.
Here’s what you should know about student loan servicer changes and how they work:
- Which student loan servicers are changing?
- How can I change my student loan servicer?
- Student loan consolidation vs. refinancing
- Should I refinance my student loan?
Which student loan servicers are changing?
Loan servicers might choose to transfer their loans or leave the servicing industry entirely in some cases. For example, if they can’t make enough money through loan servicing or have contractual disagreements, a servicer might opt to not renew their contract with the Department of Education.
While servicers don’t tend to leave the industry often, three servicers have announced that they won’t be renewing their contracts with the Department of Education, including:
Navient
- Federal servicing ended: Dec. 31, 2021
- New servicer: Aidvantage
In September 2021, Navient asked the Department of Education to transfer the federal loans it services to Maximus, another servicer. This was largely due to the financial and political turmoil caused by the pause placed on federal student loan payments and interest accrual due to the COVID-19 pandemic.
While the Department initially renewed Navient’s contract through December 2023, it ended up approving Navient’s request in October 2021. Maximus — operating under the name Aidvantage — took over Navient’s contract and began servicing loans in December 2021.
Also keep in mind that Navient will continue to service federal loans made under the Federal Family Education Loan (FFEL) program as well as private student loans.
Granite State Management and Resources
- Federal servicing ended: Dec. 31, 2021
- New servicer: Edfinancial Services
In July 2021, Granite State Management and Resources announced that it would allow its servicing contract with the Department of Education to expire in December 2021. As with Navient, Granite State’s decision was the result of financial losses due to the postponement of federal student loan payments and interest accrual by the CARES Act.
The federal student loans that Granite State serviced were transferred to Edfinancial, another servicer. Rather than servicing federal loans, Granite State will focus its resources on EdvestinU, its private student loan arm.
FedLoan Servicing
- Federal servicing ends: December 2022
- New servicer: Aidvantage, Edfinancial, MOHELA, or Nelnet
In July 2021, FedLoan Servicing announced that it would not be renewing its contract with the Department of Education in December 2021 and would instead “focus on its core public service mission in Pennsylvania.” However, FedLoan later agreed to a one-year extension of its contract to allow for a smooth transition, meaning that it will exit the servicing industry in December 2022.
Like Navient and Granite State, FedLoan’s decision appears to be largely based on the financial consequences to servicers from the CARES Act pause. FedLoan’s portfolio will be transferred to Aidvantage, Edfinancial, the Higher Education Loan Authority of the State of Missouri (MOHELA), or Nelnet.
Also keep in mind that FedLoan Servicing has managed the PSLF program and Teacher Education Assistance for College and Higher Education (TEACH) Grant Program. All borrowers enrolled in PSLF as well as TEACH Grant recipients will have their loans transferred to MOHELA.
Learn More: How to Use the National Student Loan Data System (NSLDS)
How can I change my student loan servicer?
When you take out a federal student loan, you don’t have a choice of federal student loan servicer — instead, the Department of Education assigns your loan to one of the servicers.
However, if you’re unhappy with your federal loan servicer, here are a few other options to change your student loan servicer:
Private refinancing
One way to change your loan servicer is to refinance your student loans. Through refinancing, you’ll pay off your old loans with a new private loan with the student loan refinance company of your choice.
Depending on your credit, refinancing might get you a lower interest rate — which could save you money on interest and potentially help you pay off your loans faster.
If you’re wondering how competitive your loan is, the loan score tool below can help. Just enter your APR, credit score, monthly payment, and remaining balance (estimates are fine) to see how your loan stacks up.
Federal consolidation
Another option is to consolidate your federal loans into a Direct Consolidation Loan. While this won’t lower your interest rate, it will let you extend your repayment term up to 30 years, which could significantly reduce your monthly payments — though this also means you’ll pay more in interest over time.
Additionally, you can select your servicer when you apply for consolidation.
Loan forgiveness
If you work for a government or nonprofit organization and make qualifying payments for 10 years, you could qualify to have your federal loans forgiven through the PSLF program.
Borrowers who decide to pursue PSLF will have their loans transferred to the servicer handling PSLF applications. FedLoan Servicing will manage PSLF applications until December 2022. After this, existing borrowers will have their loans transferred to MOHELA.
Check Out: How to Find Your Student Loan Balance
Student loan consolidation vs. refinancing
While the terms consolidation and refinancing are often used interchangeably, they mean different things for private and federal student loans.
- Federal student loan consolidation is the process of consolidating federal loans into a Direct Consolidation Loan. Unlike private refinancing, this won’t lower your interest rate, but it will let you extend your repayment term up to 30 years to reduce your monthly payments — though remember that this also means you’ll pay more in interest charges overall. Additionally, consolidating into a new federal loan means you won’t lose your federal benefits.
- Private student loan refinancing (also known as private student loan consolidation) is the process of paying off your old loans with a new private student loan. This leaves you with just one loan and payment to manage. You might also qualify for a lower interest rate through refinancing, depending on your credit. However, keep in mind that refinancing federal student loans will cost you access to federal protections.
| Federal student loan consolidation | Private student loan refinancing | |
|---|---|---|
| Are federal loans eligible? | Yes | Yes |
| Are private loans eligible? | No | Yes |
| Will it combine all my loans into one? | Yes | Yes |
| Will I get a lower interest rate? | No | Possibly (depending on your credit) |
| Is a credit check required? | No | Yes |
| Will I keep my federal benefits? | Yes | No |
Should I refinance my student loan?
Refinancing your student loans could be a good idea in some cases, but it isn’t right for everyone. Here are some pros and cons to keep in mind as you weigh your options:
Pros
- Could lower your interest rate: Depending on your credit, refinancing might get you a lower interest rate, which could save you hundreds or even thousands of dollars on interest charges.
- Might reduce your monthly payments: If you opt to extend your repayment term, you could lower your monthly payments and lessen the strain on your budget. Just remember that you’ll pay more in interest over time with a longer term.
- Combine multiple loans: Keeping track of multiple loans with different rates and payments can be difficult. Refinancing allows you to combine them into one new loan, leaving you with just one payment to manage.
Cons
- Loss of federal benefits: If you refinance federal student loans, you’ll lose access to federal benefits and protections.
- No loan forgiveness: Unfortunately, private student loan forgiveness doesn’t exist.
- Could be hard to qualify if you don’t have good credit: You’ll typically need good to excellent credit (or a cosigner) to get approved for refinancing — a good credit score is usually considered to be 700 or higher. This means you might have a hard time qualifying if you have less-than-stellar credit.
You can use our calculator below to see how much you can save by refinancing your student loans.
Step 1. Enter your loan balance
Step 2. Enter current loan information
Step 3. Enter your new loan information to start calculating your savings
If you refinance your student loan at % interest rate, you can save will pay an additional $ monthly and pay off your loan by . The total cost of the new loan will be $.
Does refinancing make sense for you?
Compare offers from top refinancing lenders to determine your actual savings.
Checking rates won’t affect your credit score.
