If you are unhappy with your student loan servicer, is it possible to switch over to another lender?
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Borrowers may consider these options if they are having issues with their student loan provider.
Reasons To Be Unhappy With Your Student Loan Provider
There are several reasons why a borrower might feel unhappy with their student loan provider. Over the last few years, there have been transitions among student loan servicers.
In 2021, Fortune reported Navient was passing its business off to Maximus, a federal contracting company. This meant a new student loan servicer was effective immediately for Navient borrowers, which could have led to initial confusion about the replacement.
Aside from confusion over transitions, borrowers may sometimes struggle if a student loan provider has poor service, misleading options or mismanages their loans. Borrowers who do not feel their servicer is providing services they promised may look for another option.
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Can You Change Your Student Loan Servicer?
Borrowers who have private student loans, however unhappy they may be with their current provider, cannot initiate a transfer to a different servicer.
Liz Mowry, head of student lending at PNC Bank, said lenders enter into contracts with servicers to manage their student loans. Each contract is unique to the loan originator or bank.
A borrower can potentially change servicers for a private student loan by refinancing the loan with another private lender. However, Mowry said refinancing through a different lender is not a guarantee the same servicer would not be involved.
What if the borrower has federal student loans? If these loans are held by a private lender, Mowry said they could either refinance to another private lender or consolidate their loans into the Federal Direct Consolidation Loan. Borrowers who have federal student loans held by the federal government are recommended to contact the Department of Education for information about options available to them.
Alternatives to Changing Student Loan Servicers
What are some alternative options to explore if you’re unhappy with your student loan provider but cannot change to another servicer? Check these out.
Consider Refinancing Loans
Angela Colatriano, chief marketing officer at College Ave Student Loans, recommends looking into potentially refinancing your student loans. This is often a good option for borrowers who have several student loans and need help streamlining payments.
“Beyond changing the servicer, you may be able to lower your monthly payments, lock in a fixed rate or save on the total cost of the loan — and in some cases all of the above,” said Colatriano.
Colatriano recommends borrowers with federal student loans think carefully before refinancing the debt with a private student loan lender.
“Right now, you are benefiting from repayment relief from the CARES Act,” said Colatriano. “Federal student loans also offer unique benefits, such as income-based repayment plans and public service loan forgiveness, not offered by private lenders.”
Contact the Servicer Directly
“If student loan borrowers are having an issue with their servicer, we recommend they contact the servicer directly,” said Mowry.
Mowry said often students may become frustrated with their servicer due to things outside of the lender’s control, like program requirements. If an issue is related to something else, borrowers should contact the lender who holds the loan. The lender can get involved in helping to find a resolution for the issue.
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