If you’re unhappy with how your loans are being managed, you may want to transfer student loans to another lender. However, what you probably need to do is transfer them to a new servicer.
Although the terms “lender” and “loan servicer” are often used interchangeably, they’re very different:
- Lender: The company or organization that underwrites the loans. In the case of federal student loans, the lender is the U.S. Department of Education. For private student loans, the lender will be a bank or private corporation.
- Servicer: The third-party company that manages the loan after it’s disbursed. Loan servicers act as an intermediary between you and the lender. They accept and process payments and answer borrower questions, as needed.
Here are three ways you can transfer your student loans:
- Refinance your student loans
- Consolidate your debt
- Sign up for Public Service Loan Forgiveness
1. Refinance your student loans
If you have private student loans or federal student loans, you can transfer them to another lender through student loan refinancing.
When you go through the student loan refinance process, you’ll work with a private lender to take out a new loan for the amount of your current federal and private student loans. The refinancing loan has different repayment terms than your old debt, including interest rate, loan term, and minimum monthly payment.
When you refinance, you’ll probably get a new loan servicer and your loans will be combined, so you’ll have just one loan and one monthly payment to manage, rather than several.
While refinancing can help you tackle your debt and streamline your payments, there are some downsides to consider if you have federal student loans. You’ll lose out on federal perks, such as access to income-driven repayment plans and the ability to qualify for loan forbearance. Make sure you consider these benefits before submitting your refinancing application.
2. Consolidate your debt
If you have federal student loans that you don’t want to refinance into private loans, another way to get a new loan servicer is to consolidate your debt with a Direct Consolidation Loan.
By consolidating your loans, you’ll have just one loan and one payment to remember with a new loan servicer. And, you can extend your repayment term to up to 30 years, making your payments more affordable.
Consolidation can be helpful, but it won’t help you save money or pay off debt early like refinancing does. When you consolidate, your loan’s new interest rate is based on the weighted average of your current debt. You can’t lower your interest rate, so you won’t save money. If you opt for a longer loan term, you may end up paying more in interest fees than you would on your current repayment plan, costing you more money.
Learn More: How to Consolidate Student Loans
3. Sign up for Public Service Loan Forgiveness (PSLF)
If you have federal student loans and work for a qualifying nonprofit organization or government agency, you may qualify for PSLF. Under this program, your loans will be forgiven after you work for 10 years for an eligible employer while making 120 qualifying monthly payments. Payments made under an income-driven repayment plan, such as Income-Based Repayment, count toward PSLF.
If you intend to pursue PSLF, you’ll have to send in an employer certification form (ECF). Once you submit the ECF, your federal loans will be transferred from your current loan servicer to FedLoan Servicing — the federal loan servicer that manages PSLF applications.
How to find your loan servicer
You don’t get to pick your loan servicer. Instead, your lender assigns one to you. If you’re not sure who your loan servicer is, you can find it by visiting My Federal Student Aid. If you took out private student loans, check your credit report at AnnualCreditReport.com to find out who is currently managing your loan.
Here’s a list of some major student loan refinancing lenders and their loan servicers:
|Refinancing lender||Loan servicer|
|Kentucky Higher Education Student Loan Corporation|
|University Account Service|
|Granite State Management and Resources|
|Missouri Higher Education Loan Authority|
|American Education Services|
|Missouri Higher Education Loan Authority|
|Considering student loan refinancing?
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