If you have student loans, there’s a good chance you owe money to one (or more) of the Department of Education’s approved servicers: FedLoan, Great Lakes, Navient or Nelnet. But if you’re unhappy with your servicer, or you’d like to explore your options, switching from one servicer to another is easier than you might think.
Here are a few ways you can switch your student loan servicer – and maybe even save money on your loans in the process!
Probably the easiest way to change your student loan servicer is to refinance your loans. When you refinance your student loans, you’ll get to choose which loan servicer will become your new lender, and move your debt from whatever plan you’re currently on to a new income-driven repayment plan.
Income-driven repayment plans include:
In addition to changing servicers, income-driven repayment plans offer additional benefits to those who qualify. These often include lower monthly payments, more time to repay your loans and the opportunity to have your loans forgiven once your repayment period ends.
The only downsides of a new income-driven repayment plan are starting your repayment period over when you sign the new agreement and having your payments fluctuate as your income increases. However, if your family size grows and your income remains steady, you may see your payments drop over time.
Ready to change servicers?
If you’re working with more than one loan, consolidation might be the answer to your loan servicer problems. For one, by consolidating your federal student loans into a single student loan, you could become eligible for one or more loan forgiveness programs. Even better, you’ll be able to make a single monthly payment to one loan servicer instead of several payments each month.
As part of the consolidation process, you’ll get to choose a new servicer. For federal student loans, your choices will include one of the following: Navient, FedLoan, Great Lakes and Nelnet.
If you’d prefer to consolidate your loans through a non-federal lender, private student loan consolidation is also an option. But before you sign with a private lender, make sure you know all the details about your agreement, including how long you have to repay your loan. Many times, private lenders like banks will only give you 10 years to fully repay loans, which may not always be affordable.
The Public Service Loan Forgiveness (PSLF) program is another option for borrowers who want to switch servicers. When you apply for the PSLF program, you authorize the Department of Education to transfer your loans to FedLoan, which is the only servicer who manages the program.
With PSLF, you can have your loans forgiven after making 120 on-time, qualifying payments to your servicer. Even if you’re switching servicers, any payments you’ve made on your loans will be counted towards the program. After 10 years of repaying your loans, your debt will be wiped away for good, if you qualify.
Explore the requirements for the Public Service Loan Forgiveness (PSLF) program.
If you’re done with federal servicers, you might be better off going to a bank or other financial institution to learn about your options. Private lenders can sometimes offer better interest rates, shorter repayment terms and other banking perks. The only trick is knowing if the move from federal to private is right for you.
The biggest downside to private lenders is losing your eligibility for federal loan forgiveness programs. Even if you’re eligible for the PSLF program, your career might help you qualify for other programs that can erase all, or a large portion, of your student debt. Before you consider working with a private lender, be sure to get informed on the forgiveness programs that are available to see if you might qualify.
These plans include:
With just a little bit of research, you might be able to save thousands on your student loans and get out of debt more quickly.
The best way to change your loan servicer is to pay off your debt completely – however, it may not be affordable for everyone. If you have enough money set aside, and it won’t impact your savings or hurt your financial situation, paying off your student loans will help you get rid of your servicer for good.
Just remember, you don’t have to pay off all your debt at once. But the more you pay, the sooner you’ll be free from your servicer – and your debt. Since most repayment plans don’t penalize you for paying more towards your loans than required each month, if you can make bigger payments – or make payments more often – you could be debt-free in no time.
When you’re ready to switch servicers, fill out our online form or call (800) 771-6358 to speak with a student loan specialist. We can help you decide which of these options is best for your situation and guide you through the programs that offer loan forgiveness if you’re eligible.