Student Loan Sold to Another Lender? What It Means and What To Do

Receiving a notice that your student loan was sold to another lender, or your loan is being transferred to a new servicer, can be confusing. Although this is a common occurrence, it’s a good idea to confirm that your loan details are accurate after the transfer. 

The Student Loan Ombudsman Report from the Consumer Financial Protection Bureau revealed that borrowers had issues with payment processing, inaccurate payment calculations, unexplained balance increases, and lost paperwork after federal student loan servicer transitions. 

Here’s what to know when your lender or loan servicer changes.

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What does it mean when a student loan is sold?

Your student loans have an owner who's entitled to your payments and a loan servicer, a third-party company that collects payments and provides borrower support.

Lenders sell loans all the time for business reasons. This doesn't mean you did anything wrong or that the terms of your loan will change. It just means a new lender now owns the loans, and that lender may work with a different servicer. 

Why student loans are sold or transferred

A lender might initiate a student loan transfer to a new owner or servicer for a few reasons.

• Private student loan lenders may sell a loan portfolio to access capital to fund new loans or make other investments. 
• Lenders may sell loans to reduce their exposure to default risk.
• Lenders may switch to a new servicer to simplify repayment management and day-to-day loan operations.
• Servicers may exit the student loan business or their contract may end. Many federal student loan borrowers have experienced this in recent years. 

What changes when a student loan is sold

When a student loan is sold and transferred to a new lender, your loan terms don’t change, but your repayment experience does. The table below shows what changes and what stays the same.

“On rare occasions, lenders may have on-time payment incentives that, if not in the promissory note, may be lost [after a transfer], but I haven’t seen those in years,” says Betsy Mayotte, president and founder of the Institute of Student Loan Advisors. 

Even though the terms of your loan will most likely stay the same, you do need to pay attention if your lender or servicer changes. 

“Borrowers not paying attention to their mail or other notifications may not realize the transfer occurred, which could result in late payments,” Mayotte warns. 

What to do when your student loan is sold

Your student loan transfer should hopefully be seamless if your loan is sold. Unfortunately, with so much data involved, things can go wrong. These mistakes can cause financial harm, such as late fees, if they’re not resolved quickly.  

You can reduce the risk of problems by taking five simple steps to prepare for a student loan transfer:

1. Confirm the transfer notice: Contact your lender or servicer directly to verify that the transfer notice is legitimate. Federal student loan borrowers can check their StudentAid.gov account to find their new servicer.
2. Set up a new account: Create an online account with the new lender or servicer to manage your loan details, get updates, and make payments digitally.
3. Update autopay: Ensure payments get to your new servicer on time. "When the consumer set up the original autopay arrangement, they granted permission to the servicer to withdraw payments,” says Mayotte. “That permission doesn’t carry over or transfer to the new servicer, so the consumer needs to set up the arrangement again.”
4. Verify balances: Compare all loan data transferred against your own records to confirm the new servicer has accurate information. This includes your loan’s outstanding balance, payment amounts, and dates that payments were made. 
5. Keep records: Maintain a file of your transfer notice, loan details after the transfer, and any future payments or changes to your loan account. This digital or physical paper trail serves as proof if you need to file a dispute later.

Nicole Dilts, vice president of commercial solutions at MSU Federal Credit Union, advises quick action if you spot an error on your newly transferred loan account.

“The best protection is to dispute errors in writing directly with the new servicer, keep records of all communications, and continue making on-time payments to the extent possible while the issue is under review to avoid delinquency,” says Dilts. “Document everything, including the transfer notice, screenshots, and prior statements showing the correct balance or payment history.”

All of this documentation should be included with your formal written dispute letter and sent through your servicer's online portal or via certified mail. Dilts also suggests monitoring credit reports for any adverse impacts as a result of the transfer.

How a loan transfer affects credit and payments

Although your repayment plan and the amount of your payments won't change, having a student loan sold to another lender can affect your payment process. 

“Autopay disruptions typically occur because stored payment instructions are system‑specific,” says Dilts. “If the new servicer uses a different platform or requires fresh authorization, the old autopay details may not be carried over. Even when systems are compatible, timing gaps around the transfer date can interrupt a scheduled payment.”

Some servicers offer a temporary grace period for payments during a transition. Still, your credit can take a short-term hit due to missed or misapplied payments.

The best way to protect your credit score? Don’t procrastinate. 

Verify your new servicer ASAP and re-enroll in autopay immediately after activating your online account. Screenshot the autopay confirmation page, or if it's emailed to you, keep it on file in case you need to dispute an error on your credit report. 

If you’re not confident about whether the new servicer’s autopay is reliable, submit your payment manually during the transition. This way, you know the payment will be processed in real-time.

Can you refinance after a loan is sold?

You might want to make your own moves after you’ve had a student loan sold to another lender. 

If your new lender or servicer isn’t providing the experience you expect, refinancing your student loans allows you to transition to a new lender. You can also refinance to combine multiple student loans into one or to lower your interest rate.

If you refinance, your new student loan refinance lender pays off your current loan using the funds from your new loan. Your new loan has its own interest rates and terms, and you'll start making payments to your new lender based on the new repayment terms you agreed to. 

Federal loan borrowers typically shouldn't refinance their student loans, as doing so would permanently turn their federal loans into private loans. Private refinance loans don’t offer the same borrower benefits as federal student loans. 

If you think you might take advantage of student loan deferment, federal forbearance, student loan forgiveness benefits, or income-driven repayment plans, you don't want to refinance federal loans.