Dealing with an unresponsive or otherwise difficult loan servicer can be frustrating. The good news is that you’re not necessarily stuck with the servicer you’ve been assigned to. You can change student loan servicers through consolidation or refinancing — though both of these options come with some trade-offs.

Reasons to change your student loan servicer

A common reason that borrowers want to switch loan servicers is poor customer service. This may include having trouble reaching a representative or receiving incorrect or confusing information.

But student loan expert Mark Kantrowitz, author of “How to Appeal for More College Financial Aid,” says that borrowers usually won’t solve their problems by changing providers.

“The loan servicers have similar performance, and borrower complaints may have more to do with the design of the loan program and the limits on the servicer’s authority, as opposed to the servicer being mean or incompetent,” he says.

Still, if you’ve had repeatedly bad experiences with your servicer and are considering consolidating or refinancing your loans anyway, switching servicers may not be a bad idea.

How to change your student loan servicer

There are only a few different ways to change your student loan servicer.

Direct Loan Consolidation

Borrowers who are unhappy with their federal loan servicer but who want to maintain their federal student loan status can consolidate their federal loans into a Direct Consolidation Loan. When you consolidate through the official federal program, you’ll have the option of choosing a loan servicer.

Your current options are:

  • OSLA Servicing.
  • Nelnet.
  • HESC/Edfinancial.
  • Great Lakes Educational Loan Services.

The downside of consolidating is that you may lose credit for any payments made toward an income-driven repayment plan. If you’ve already made payments toward that program, it’s likely better to keep your current loan servicer and not consolidate. It’s also worth noting that your interest rate will be the weighted average of all loans you’re consolidating, so you may actually pay more in interest on your loans if you end up on a longer repayment plan.


The other way to change your loan servicer is by refinancing your student loans. When you refinance federal student loans, those loans become private. You’ll lose all federal benefits, including loan forgiveness programs, income-driven repayment plans and extended deferment and forbearance.

You can also refinance private loans with a different private lender. Refinancing gives you more options than consolidation, because you can choose from any lender you want and pick a different term. Most borrowers refinance to get a lower interest rate, which can save them hundreds or even thousands of dollars in interest over the life of the loan.

Can your student loans be sold to another lender?

If you have federal student loans, Federal Student Aid (FSA) may transfer your loans to a new servicer. You will likely receive an email or letter before or after this happens. Private student loans can also be sold to new servicers at any time, but you’ll be notified of this change.

When the transfer occurs, you may need to set up your payment information all over again. If you had automatic payments set up with your previous lender, you’ll likely need to reenroll with the new loan servicer. You may have to complete some extra steps to relink your payment information to the account.

How are student loan servicers changing in 2021?

Next year will bring some huge changes for many student loan borrowers. Granite State, the Pennsylvania Higher Education Assistance Authority (also known as FedLoan) and Navient have all ended their contracts with the U.S. Department of Education. Borrowers with loans managed by FedLoan will have their loans transferred to MOHELA, Edfinancial and Nelnet. Granite State loans will be transferred to Edfinancial, and Navient loans will be transferred to Maximus. These changes will be ongoing through the rest of 2021.

Kantrowitz believes that the complexity of the student loan program is one reason why companies are leaving the industry.

“It’s not just the dozen repayment plans, but also deferments, forbearances, the payment pause and interest waiver, and a lot of other details and many change orders from the U.S. Department of Education,” he says. “This increases the cost of servicing federal student loans, with all the various due diligence requirements.”

The Department of Education is also in the process of improving student loan servicing overall. For the servicers that remain, the department is implementing increased performance accountability metrics, stating that servicers that fail to meet standards will not be granted new loans.

What to do if your loan servicer is changing

If you have student loans with one of the servicing companies that is leaving the industry, or if your servicer has sold your loans to a different company, you should download all of your previous statements, tax forms and other documents. Store these on the cloud where you can easily access them. Some documents may get lost in the transition, and it’s crucial that you have your own copies.

If you’re working toward PSLF, file an employer certification form before your servicer changes. Make sure that you have copies of any previously submitted PSLF certification forms.

“If the borrower has been denied PSLF, they should file an appeal before the change in servicer,” Kantrowitz says. “Sometimes, records relating to a borrower’s payment history get lost when loans are transferred to a new loan servicer.”

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