As a Direct Loan or Direct PLUS Loan borrower, you know that one key to successful management of your loans is to understand your obligations and how to manage those loans. That includes knowing what changes are occurring that could impact your student loan repayment. Right now, some borrowers are experiencing changes in the servicer for their loans and possibly how those loans are being processed.
If you are one of those borrowers, you may have been contacted by a new servicer – an organization other than the U.S. Department of Education (the Department) and you may have some questions.
Although the Direct Loan program has been in existence for several years, the number of loans in the program increased significantly over the past couple of years when legislation eliminated the Federal Family Education Loan Program (FFELP). As a part of the changes with that legislation, the servicing of student loans is being transferred among several different servicers across the country. Many of these servicers have several years of experience in the student loan industry. In the recent past, Direct Loans were primarily serviced by one company and are now being transferred to the servicers listed below.
The Department has contracts with these companies to service federal student loans, and the Department may change who services your student loans. Unlike other loans such as mortgages, federal student loans are not bought and sold by servicers. The Department transfers the loans to the servicers with whom they have contracts and the servicers conduct the daily activities required during loan repayment.
A servicer is hired by the Department or FFELP lender to collect, monitor, and report student loan payments. Once you have graduated or dropped below half-time status, your student loans enter their grace period. The grace period for Stafford and Direct Loans is a six-month timeframe during which you are not required to make payments on your student loans. Once the grace period ends, your student loans will enter repayment and regular loan payments must be made, unless you have been approved for a different repayment option. The servicer assigned to your loans will contact you to introduce themselves and provide important information about your repayment terms. Make sure your school and servicer have your most current mailing address and contact information. It is your responsibility to notify your school and servicer if your mailing address and contact information changes.
If you have a Direct Loan, a federal student loan that you borrowed directly from the Department through your school, the Department will select who services your loans. The servicer is assigned your loans; the location of the servicer is not dependent on where you went to school or where you live.
One of the following servicers may service your Direct Loan or Direct PLUS Loans:
|Authorized Federal Direct Loan servicers||Website||Phone numbers for borrower help||Phone numbers for overseas borrowers|
|Cornerstone||www.MyCornerStoneLoan.org||(800) 663-1662||(801) 321-7295|
|FedLoan Servicing (PHEAA)||www.myfedloan.org||(800) 699-2908
|Granite State||www.gsmr.org||(888) 556-0022||(603) 225-6612|
|Great Lakes||www.mygreatlakes.org||(800) 236-4300
|HESC/EdFinancial||www.edfinancial.com/DL||(855) 337-6884||(855) 337-6884|
|Missouri Higher Education Loan Authority (MOHELA)||www.mohela.com||(888) 866-4352||(636) 532-5189|
|National Education Loan Network (Nelnet)||nelnet.com||(888) 486-4722||(303) 696-3625|
(formerly Sallie Mae)
|www.navient.com||(800) 722-1300||If toll-free (no cost per call) number cannot be accessed, use (317) 806-0580 (cost per call)|
|www.osla.org||(800) 456-6752||(405) 556-9200|
In some instances, you may see some changes in your monthly payment amount or payment schedule. This is due to the different operating procedures at each servicer.
As a borrower, you should monitor this carefully and contact the servicer if you have any questions or don't understand any changes. The servicer is there to assist you and to make sure you understand any changes to your loans.
There may be a delay in having access to your loan information online when the transfer takes place. Once the new servicer receives your loan information, they review the file and upload the information to their system. This process can take up to 14 business days. It is important to be patient during this process and to keep in communication with your servicer, allowing time for the transfer to be completed.
The servicers listed above have entered into a contract with the Department to service federal student loans. The Department assigns the loans to a servicer, and you are not able to select or change who services your loans.
From time to time, the Department's contracts change with servicers and the loans need to be transferred to another servicer. Borrowers impacted by such a transfer should receive notification by email and letter prior to and after the transfer takes place. Borrowers should re-establish access to online account services with the new servicer.
It is possible that you will have a different monthly payment amount when your loans are transferred due to the different operating procedures at each servicer. If that happens to you and you aren’t sure you can make the new monthly payment, be sure to contact your servicer for repayment options. Mapping Your Future has information on the various repayment options, as well as calculators, to help you manage your student loans. For example, Income-based repayment is an option for some borrowers who have difficulty with making monthly payments.
The Department has contracted with companies that are either nonprofit or for-profit companies. Although they do work for the federal government, they are not a part of the federal government and therefore cannot have a .gov address.
If you aren’t sure if the company contacting you is a legitimate organization and concerned about sharing your private information, you can check this page to determine if the company is on the list of servicers or call the Department of Education at (800) 4-FEDAID to determine if the company contacting you is one of the servicers for federal student loans.
First, contact the servicer to see if together you can come to a solution for any disputes you may have.
If you are unsuccessful in resolving the dispute, then contact the Federal Student Aid Ombudsman.
United States Department of Education
FSA Ombudsman Group
P.O. Box 1843
Monticello, KY 42633
The Federal Student Aid (FSA) Ombudsman works with student loan borrowers informally to resolve loan disputes that the borrower is unable to resolve. The goal is to find creative alternatives for borrowers who need help with their federal loans.
Use the National Student Loan Data System (NSLDS) at www.nslds.ed.gov or call (800) 999-8219 to obtain basic information on your federal student loan debt.
You will need an FSA ID to view your loan history (previously you would have used your federal PIN).
Here are some of your rights as a borrower:
Here are some of your responsibilities as a borrower:
For a complete list of your rights and responsibilities, see your Master Promissory Note (MPN).
Contact information for other types of federal student loans:
Yes. If you paid more than $600 in interest on your loans in a calendar year, you should receive a statement from your loan servicer either electronically or via U.S. postal mail in January each year. Student loan interest payments are reported to both the Internal Revenue Service (IRS) and the borrower on IRS Form 1098-E, Student Loan Interest Statement.
You may be able to deduct a portion of the interest on your income tax return. If you paid less than $600 in interest or if you don't receive a statement, you should contact your servicer to determine the exact amount of interest paid on your student loans.
To determine what company or companies serviced your loans or how to contact them if you don't receive a statement, sign into the National Student Loan Data System (NSLDS).