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If you have a student loan, you often deal with two different but complementary parties, the student loan lender and the student loan servicer. So what’s the difference between the two?

The lender is the company or organization that originates the loan. In the case of federal student loans, that lender is the federal government, or more specifically the U.S. Department of Education (DOE).

The student loan servicer is the company that manages your loan’s repayment, and acts as the middleman between you and your lender.

You may work with your loan servicer for years, and it’s important you understand the role it plays in your financial life.

We’ll start by looking at loan servicers for federal loans and then look at the role they play in private loans.

What do loan servicers do?

The federal government is far and away the biggest provider of student loans for students enrolled in colleges, graduate and professional schools.

All federal student loans are administered by loan servicers. If you’re one of the millions who have a Direct Loan (also called a Stafford Loan), or any other type of federal student loan, you can bank on the fact you’ll work with one.

In addition to billing borrowers, and collecting and processing their payments, loan servicers are tasked with helping borrowers take advantage of policies and programs offered by the DOE:

  • Repayment plans: If you’re struggling with your monthly loan payments, your servicer can help put you on a repayment plan that is more affordable, including one that caps your monthly payments as a percent of your income
  • Forbearance and Deferral: If you need to temporarily halt or reduce your federal student loan payments due to financial hardships, your loan servicer can help set up a forbearance or deferral to do that
  • Consolidation: If you have multiple federal loans, a servicer can help you start the process of combining them into a single loan
  • Loan forgiveness: Borrowers who work for the government or non-profits may qualify for the Public Service Loan Forgiveness program. When you’re in it, your remaining loan debt is forgiven, typically after you make ten years worth of payments on an income-driven repayment plan. Loan servicers verify if you qualify and start the enrollment process
  • Borrower questions: You may be paying off your federal loan for twenty-five years or more. During that time you will undoubtedly have questions or run into problems with your bills or payments. Your servicer is your first stop when you need answers, support or information. Its goal is to ensure you successfully repay what you owe

On its own, your loan servicer can’t alter your loan’s payments or its terms. Rather, they help you make your case to your lender — in this case, the government — by advising you on what programs you qualify for, and processing the materials that the government requires from you to make changes.

Questions about federal loans for your current or upcoming school year should be addressed with your school’s financial aid office. For your other loans, you should contact that loan’s servicer as soon as problems emerge. You should update your servicer right away if any of your relevant personal information changes, including your name or address.

How to find your student loan servicer

If you need to find out who your loan servicer is, you’ll first need to figure out if you have federal or private student loans.
If you have federal student loans, you can use the National Student Loan Data System (NSLDS) and log in with your FSA ID. Once you’re in, you’ll see a comprehensive summary of all your federal student loans, including the types of loans you have, the amounts and outstanding balances of each loan, your interest rates and who your loan servicer is.
If you have private student loans, you can take a look at your credit reports or loan statements. Sallie Mae and its spin-off company, Navient are some of the most common private student loan servicers.

Who is my federal loan servicer?

Currently, the federal government contracts loan servicing to nine companies and organizations, and all of these existing loan-servicing contracts are set to expire in 2019.

These servicers handle loans made through William D. Ford Federal Direct Loan Program and the Federal Family Education Loan (FFEL) Program, which account for the large majority of federal loans.

The federal government’s loan servicers are:

You can learn more about your servicer on its own site. You can see if consumer complaints have been lodged against it at the Consumer Financial Protection Bureau (CFPB), the watchdog agency tasked with educating and empowering consumers in their relationships with financial institutions. Check out the Federal Student Aid website for a full list of all student loan servicers.

Can I choose my federal loan servicer?

Borrowers do not typically choose their loan servicers. The federal government assigns them. The DOE scores each servicer every three months, based on its success collecting loan debt and satisfying customers. The higher the score, the more loans the government assigns that servicer.

Generally, your loan servicer will contact you after a loan’s first disbursement. You can always find your loan servicer’s name by logging into your account on the Federal Student Aid website.

You should create an account on your servicer’s site, and then connect it to your bank account when you need to start making payments. Most servicers reduce the interest rate by .25% if you set up automatic payments, which can save you upwards of $1,000 in total payments, depending on the amount you owe and the loan’s term.

Over the life of your loans, the DOE may reassign your servicer for a variety of reasons. That doesn’t alter your payments, and your records will automatically transfer. If your loan is reassigned, your new servicer will contact you and give you information about payments moving forward.

If you’ve enrolled in the Public Service Loan Forgiveness program, FedLoan Servicing will manage your loan. Another servicer may have started the enrollment process, but the loan is transferred once you’re in the program.

Why you might have multiple loan servicers and how to handle them

If you have multiple federal student loans, you may have a different servicer assigned to each. Consolidating your student loans is the only way to reduce your loans down to one, which you can usually do with a federal Direct Consolidation Loan.

When you apply for loan consolidation, you’ll have the opportunity to choose one of four servicers for the new, consolidated loan: FedLoan Servicing, Great Lakes Educational Loan Services Inc., Navient or Nelnet.

Make sure you understand the pros and cons of loan consolidation before going down this road, however. You may end up paying more in interest because your payments are extended over more months.

What if I’m having problems with my federal loan servicer?

Some loan servicers have come under fire — and in the case of Navient, the nation’s largest servicer, faced high-profile lawsuits — for allegedly improperly advising borrowers and mishandling their accounts.

You should understand your rights as a borrower, and educate yourself about your options to pay down your debt in the most manageable and cost-effective way possible. Don’t just rely on your servicer to do that for you.

If you have questions or you think something just doesn’t seem right, you have three main parties who can help.

  • Loan servicer: You should first raise problems directly with your loan servicer. Identify the specific problem, such as a disagreement over the balance or status of your loan. Then assemble the relevant records and documentation, including original copies, such as bills. Take notes on all your conversations, and record the names of anyone you speak with. Make sure you follow up as needed
  • Ombudsman Group: If you and your servicer can’t resolve your inquiry or complaint, you can enlist The Federal Student Aid Ombudsman Group to assist. Once you submit information about your account and details of your problem, the Ombudsman Group’s job is to help resolve disputes fairly and neutrally. But remember, while they will listen to you, the group won’t automatically take your side
  • Consumer Financial Protection Bureau (CFPB): The CFPB is a third option if the other two options don’t work out. You’ll submit a complaint that includes details of what you think your servicer did wrong. The CFPB will then route your complaint to your servicer, to prompt a resolution. It will also add your complaint to its records of others lodged against that servicer

How do loan servicers work for private loans?

If you have private student loans — like from a bank, credit union or online lender — the loan servicer is less transparent.

Some private lenders service loans they originate. Others contract with third-party servicers to manage their student loans. In any event, you don’t pick your servicer.

According to Leslie H. Tayne, Esq., Founder & Head Attorney of Tayne Law Group, P.C., a firm that specializes in consumer debt resolution and alternatives to bankruptcy, you should hold onto the original paperwork when you first take out your private student loan.

By the time you start repaying it — potentially years later — you likely will interact only with the servicer, who will send you bills, and collect and process your payments. It’s easy to forget who you took the loan out with originally, and it’s often not obvious on the servicer’s materials. It’s also possible your lender sold your loan, so your current loan owner may not be the bank or financial institution that originated it.

Knowing the names of your servicer, your original lender and your current loan owner will help you identify inaccuracies on your credit report, because those names may show up there.

Keep in mind that many things loan servicers do for federal student loans – like modifying repayment plans or setting up loan forgiveness — are dictated by the federal government. Private loans don’t operate under those same regulations, and you shouldn’t assume they’ll offer you those same options.

In most cases, private loans are less flexible in adjusting your payments. If you’re struggling to repay your loan, contact your servicer to find out what it can do for you.

If you are dissatisfied with the loan servicer for your private loan, or believe it made errors, you should try to resolve the situation right away with the servicer. You can turn to the CFPB for help if you need it.