What Happens If Your Student Loan Servicer Changes?

The Department of Education issues Federal loans to students, but it doesn’t work with borrowers directly. Instead, it hires outside loan servicers to shoulder the administrative burden of educational debt. And those loan services can change from time to time.

In fact, it was recently announced that loans from MOHELA will be transferred to other loan servicers. This isn't a new concept - it happens all the time.

The Federal Student Aid office currently works with 5 main loan servicers, and has worked with eighteen loan servicing companies. Borrowers typically work with one loan servicing company for the life of their loans. They receive their initial disbursement from the company. And 10 to 30 years later, they receive a celebratory letter from the same servicer when they pay off the loans.

But not every borrower has that experience. The U.S. Department of Education can transfer a loan to a different loan servicer at any time (and historically, they've done this about every 5-10 years for some borrowers). In fact, we recently spoke to a borrower who's had three servicer changes in the last 5 years.

Here’s what you need to know if your student loan servicer changes.