A loan servicer is assigned to you when you receive a federal student loan. This student loan servicer handles numerous parts of your federal student loans, such as repayment and the repayment plan you choose. However, working with student loan servicers only sometimes results in the most significant results for student loan borrowers. Let’s go through everything you need to know about working with the customer care department of your loan servicer, including the roles and responsibilities, how you change your servicer and more.
Who is a Loan Servicer?
A loan servicer is a company that handles your federal student loan billing and other services at no cost to you. Your loan servicer will work with you on repayment choices (such as income-driven repayment plans and loan consolidation) as well as other federal student loan-related activities.
Keep your contact information up to date so that your servicer can assist you in staying on track with your loan repayments. Your servicer will be ready to assist you if your circumstances change at any moment during your repayment tenure.
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Roles and Responsibilities
You must get help from student loan servicers with repayment. They are responsible for:
- Sending you bills for student loans
- Assisting you with setting up auto-pay, which enables you to make payments instantly from a bank account. This usually includes a 0.25% interest rate discount. If you’re a banking customer, some private lenders will give you an even greater discount.
- Advising you on your alternatives for repayment, such as altering federal student loan repayment programmes if you want a lower monthly payment
- In case of unemployment or other financial difficulties, delaying payments for a while. You can do this through the delay and forbearance programmes offered by the federal government; which one you are eligible for will depend on your financial situation. Forbearance is also available for private student loans, albeit usually for a shorter length of time.
- Finding out if you’re eligible for federal student loan forgiveness programmes
- Consolidating all of your federal student loans into one payment qualifies you for specific repayment options and can improve your loan management.
Any additional payments you make must also be applied to your account in the manner of your choice by student loan servicers. For instance, your servicer can provide you with the option to choose whether the additional funds should be applied to your outstanding debt or a future payment. Requesting that your payment be applied to your outstanding debt rather than delaying your due date will result in the greatest interest cost savings.
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How to Identify Your Student Loan Servicer?
Looking at your most recent student loan bill will help you find your servicer if your loans are currently being repaid.
Your loans are no longer in the grace period, which is a six-month period during which you are not required to make payments when they enter repayment status. This occurs after you graduate or leave school. Your servicer must let you know when your first payment is due and how to pay the monthly cost to signal that repayment has started.
Your options for finding out which servicer has been assigned to you depend on the sort of loan you have if you haven’t received your bill yet or aren’t sure where it is.
- Federal Loans: Using your Federal Student Aid ID (FSA ID), access the Federal Loans section of the website. There will be information about your loans and your servicer’s contact details available. You can obtain an FSA ID online if you don’t already have one. If you have a Perkins loan, your institution or university—and not a for-profit business—might send you a bill each month.
- Private Loans: To learn which company is currently servicing your loan, get in touch with your original lender, such as the bank or credit union that issued it. If you’re unsure who your original lender was, check your credit report, which lists all of your credit card and loan accounts as well as the lenders.
Can you Change Your Loan Servicer?
If, for instance, you are not pleased with the servicer’s level of customer service, you cannot ask for a different loan servicer. However, you will be given a new servicer if you decide to make specific changes to your loans.
For instance, your loans may be transferred to FedLoan Servicing, which manages the programme on behalf of the government, if you apply for Public Service Loan Forgiveness (PSLF), a federal programme that offers loan forgiveness to qualified employees of the government and nonprofit organisations after 120 payments. This implies that before you earn forgiveness, FedLoan Servicing will collect payments and validate that your work is eligible for the programme.
Additionally, you can choose the new servicer on your application when you combine several federal student loans into one. Following the new repayment strategy you choose, you will subsequently make a single monthly payment to that company.
Finally, you have the choice of working with a different lender and servicer if you refinance student loans with a new private lender. Your old loans will be repaid by a lender, and they will then issue you a new loan, hopefully with a lower interest rate and a new repayment schedule.
Servicer Changed? Here’s What to Expect
For a variety of reasons, the Department of Education may move your student loan from one servicer to another on occasion. If your loan is transferred to a new servicer, the following steps are usually taken:
- You may receive a letter from your current servicer informing you of the change.
- Your new servicer will send you a welcome letter with instructions on any actions you may need to take.
- Your borrowing terms will remain unchanged.
If your loan servicer changes, you should continue to make payments as usual. Once the transition is complete, payments made to your current servicer will be transferred to your new servicer. When the transfer is complete, you can stop paying your previous servicer and start paying your new servicer.
Who to Complaint to About Your Loan Servicer?
You can search the CFPB’s complaints database by the firm to find out what borrowers are saying about both public and private servicing companies. If you have the choice of a provider, such as when consolidating federal loans, and you’re looking for the best student loan servicer for your needs, this can be helpful.
There are many options for submitting a complaint if you’re having trouble getting what you need from your servicer. You may lodge a grievance with:
- The CFPB
- The U.S. Department of Education
- The Federal Trade Commission (FTC)
- Your state Attorney General’s office
- Your state’s Office of Consumer Protection
In many circumstances, these organisations will work together to settle your complaint. You’ll also assist them in tracking servicers’ success in assisting debtors with repayment.
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FAQs
A loan servicer is a company that we hire to handle your federal student loan billing and other services on our behalf at no cost to you.
The majority of student loan originators are huge institutions, such as large banks or the federal government.
To collect and manage all of those borrowers’ monthly payments, the federal government has contracts with eight student loan servicing organisations. So, when you pay your federal loan fee each month, you send it to one of these corporations rather than the government.
Typically, your loan servicer processes your loan payments, responds to borrower enquiries, tracks principal and interest paid, and administers your escrow account (if you have one). Under certain conditions, the loan servicer may commence foreclosure proceedings.
This was everything you need to know about your loan servicer. For more information on education loans, FOREX and bank accounts, subscribe to FLY.FINANCE.
