Trying to navigate the student loan world can be overwhelming, particularly when it comes to figuring out how federal loan servicing works. At the core of the system are the student loan servicers, the companies that manage your federal student loans. From receiving payments to getting you into the best repayment plan, your loan servicer is an important part of your financial life. In the guide that follows, we’ll explain what federal loan servicing is, how student loan servicers work and how to work with them to effectively manage your debt.
What is Near Future Federal Loan servicing?
The term federal loan servicing, according to StudentAid.gov, is the “process by which slu7l9288axlx4dent loan payments are collected … from the student borrower and loan repayments are made to the student lenders.” These firms perform functions like billing, customer service, taking payments and managing repayment plans. When you get a federal student loan, your loan account is assigned to a loan servicer.
Also, keep in mind that while you’re borrowing money from the federal government, the primary financial relationship you’ll carry will be with your loan servicer. They are the intermediary between you and the Department of Education.
Who are the Big Servicers of Student Loans?
The federal government has contracts with several companies to service student loans. A few of the largest student loan servicers are:
- MOHELA (Missouri Higher Education Loan Authorities)
- Nelnet
- Aidvantage
- Edfinancial Services
- OSLA Servicing
- Great Lakes Higher Education Corporation (now part of Nelnet but used to operate)
All of these servicers have the same basic features, though the quality of service can be different. It’s important to be aware of who your servicer is and be in regular contact with them.
Responsibilities of Servicers of Student Loans
Knowing the obligations of student loan servicers can prepare you in knowing what to expect. Their primary duties include:
Billing and Payments
Your servicer is responsible for sending you monthly billing statements and for processing your payments. You can often schedule automatic payments on their website to guarantee on-time payments and to potentially receive a small interest rate cut.
Help with Payments opción a reembolso rehabilitación de préstamos
If you can’t afford to make payments, student loan servicers can assist with ways to:
- IDR (Income-Driven Repayment) If you qualify for an IDR Plan (see below) you can make monthly payments that are adjusted for your income.
- Graduated Repayment Plans
- Extended Repayment Plans
They can help you navigate the application process and set your monthly payment based on your income and your family size.
Dealing With Deferment and Forbearance Applications
If you are experiencing economic hardship, are unemployed or are serving in the military, you may be eligible for deferment or forbearance, which allow you to temporarily stop making payments on your loan or to reduce the amount owed until you are in a better position to pay. Servicers process such requests and assess your eligibility.
Loan Forgiveness Programs
Some borrowers may be eligible to have the balance of their loans forgiven under one of these programs:
- Public Service Loan Forgiveness (PSLF)
- Teacher Loan Forgiveness
- IDR Forgiveness
Your servicer facilitates the paperwork and re-certifies your eligibility over time.
Customer Support
Servicers are your point of contact for questions on your loan balance, payment history, interest rates and repayment options. Strong customer service is essential to a healthy financial relationship with your student loans.
How to Figure This Out: Who Is Your Student Loan Servicer?
You can quickly find out who your student loan servicer is if you’re not sure by logging into your StudentAid account. gov, where you can see a summary of your loans and which company manages them. Maintaining up-to-date contact information with your servicer is crucial so you don’t miss important updates or billing statements.
What to Do When Student Loan Servicers Make a Mistake
Dealing with student loan servicers can be tough at times, particularly if you experience customer service problems. Here is some advice to help make the process a little smoother:
Document All Correspondence
Keep copies of emails, letters, and notes from the phone calls you have with your servicer. There is also the added benefit of being able to document your communications with them in case there are any disputes in the future.
Confirm Everything in Writing
If your servicer says it will process a deferment, switch your payment plan or grant you forbearance, you need to request written confirmation.
Stay Proactive
Don’t let problems get out of hand. If you think you’ll be unable to make your payment/ if financial hardship is likely, contact your servicer as soon as possible to talk through options with them.
Check Your Loan Status Again And Again Obviously, do this a lot.
Mistakes happen. Keep on top of your account to make sure your payments are being applied properly and your loan balance is going down.
Know Your Rights
As a consumer, you have rights under federal law. You can complain to agencies if you suspect your servicer isn’t treating you right:
- The CFPB
- Federal Student Aid (FSA) Ombudsman Group
New FLSP Requirements With Modified Federal Loan Servicing
Department of Education plans The Department of Education has signaled in recent years that changes in federal loan servicing are on the horizon through a program it has called “Next Gen FSA. The aim is to update the outdated federal loan servicing system with better customer service and technology platforms. Through this program, new contracts with servicing companies are designed to make the system easier for borrowers to navigate.
If you’re a borrower, it’s important to know about these changes, as they could change where you make payments or how you interface with your loan account in the future.
Typical Borrower Problems with Servicers
Despite being essential, student loan servicers are sometimes accused of:
- Misapplying payments
- False information regarding how to pay it back
- Botching applications for relieved loans
- Customer service sucks Open Table and your follow-up was bad as well.
An educated borrower will help you guard against errors and make sure you get the help you’re entitled to receive.
Final Thoughts on Federal Loan Servicing There you have it.
Knowing how federal loan servicing works and your student loan servicer is key to managing your student debt well. Your servicer is your point of contact for making payments, applying for a deferment, exploring a repayment schedule and sign up for loan-forgiveness programs.
Be proactive, document everything, and check your account frequently! With some care and some knowledge of how federal loan servicing operates, you can effectively manage your loans and work toward a debt-free future.
