The CFPB recently sued Navient, the largest student loan servicer, for “systematically and illegally failing borrowers at every stage of repayment.” These alleged student loan servicing failures harmed borrowers who could have been given better options to repay their student loans. Just how important is a student loan servicer and why it’s important to know?
What is a student loan servicer?
A student loan servicer is a company that handles the billing and related services of your student loan, be it owned by the federal government or a private lender. It manages your payments after your loan has been disbursed to you.
Take the example of federal student loans. They are paid out or disbursed in two payments. Once the first payment has been made to your school, your student loan servicer will contact you.
There are cases when a company serves as both lender and servicer, but most often than not, third party companies are engaged to service your loan.
It’s up to the U.S. Department of Education to assign to you a student loan servicer. The private lender also decides which is your student loan servicer.
Who is your student loan servicer?
For federally held student loans under the William D. Ford Federal Direct Loan Program (Direct Loan) and the Federal Family Education Loan (FFEL), these companies act as your loan servicer with their contact numbers:
- CornerStone – 1-800-663-1662
- FedLoan Servicing (PHEAA) – 1-800-699-2908
- Granite State – GMSR – 1-888-556-0022
- Great Lakes Educational Loan Services, Inc. – 1-800-236-4300
- HESC/Edfinancial – 1-855-337-6884
- MOHELA – 1-888-866-4352
- Navient – 1-800-722-1300
- Nelnet – 1-888-486-4722
- OSLA Servicing – 1-866-264-9762
For Federal Perkins Loan, you may contact your school that received your loan or the ECSI Federal Perkins Servicer at 1-866-313-3797.
For private student loans, including those FFEL Loans not owned by ED, contact your lender.
Why do you need to know your student loan servicer?
1. The student loan servicer handles your loan payments. You send your required monthly payments to your loan servicer. You can also make extra payments to your loan to pay it off early and ask that they be applied to your loan principal.
Be ready to report or dispute should you discover that these extra payments have not been properly applied.
2. The student loan servicer helps you handle your loan payments. Borrowers can lower their monthly payment.
For federal student loans, you can ask them about relevant income-driven plans and assistance to enrol in that plan or switch to another. For those with disabilities, including veterans, loan forgiveness and discharge may be an option.
The loan servicer is thus the proper party to ask advice about income-driven repayment plans, forbearance or deferment, loan forgiveness, discharge,or loan consolidation for federal students loans; or refinance for private student loans, whichever is appropriate for you.
3. The student loan servicer reports your student loan payment behavior to the credit reporting bureaus. If you default on your loan or miss some monthly payments, your credit will suffer.
That’s why it’s important to keep the contact information of your student loan servicer at hand for inquiries and clarifications about your student loan repayment.