When you get a federal student loan, you're assigned a servicer. This student loan servicer manages various aspects of your federal student loans, including repayment and what plan you end up on.
Unfortunately, working with student loan servicers doesn't always result in the best outcome for student loan borrowers. Let's take a look at what you need to know about working with your loan servicer's customer service department.
- In the past, student loan servicers have recommended programs that don't benefit borrowers.
- The federal government assigns companies to handle different aspects of student loan borrowing, including billing and repayment.
- Understanding your loan repayment options before you call your servicer can help you get the help you need.
- Check with the National Student Loan Data System regularly to stay up to date on your loan and servicer information.
- Be prepared before you contact your federal student loan provider if you need help during the repayment period.
What Is a Federal Student Loan Servicer?
Through its Direct Loan Program, the U.S. Department of Education provides student loans to borrowers who want to use the money to pay for their higher education. Rather than managing the terms of your student loan repayment, though, the government assigns a company to handle various aspects of billing and repayment. The companies that manage your federal loan repayment are known as servicers.
After your first loan amount is disbursed to your school, the government assigns you a servicer. You can find out who your student loan servicer is by visiting your Federal Student Aid (FSA) dashboard. You should have created an FSA ID when you applied for your student loans through the Free Application for Federal Student Aid (FAFSA). You can use your FSA dashboard to get information about your student loans and your servicer.
How Federal Student Loan Servicers Are Supposed to Help
Your federal student loan servicer is supposed to help you manage your student loans after you get through school—including the payment plans you're eligible for. If you can't afford your monthly payments, your student loan servicer is supposed to help you figure out which income-driven repayment plan is right for you.
Additionally, your servicer is supposed to help you keep track of your student loan payments and interest. This information can be used later to help you obtain Public Service Loan Forgiveness (PSLF) or provide you with interest payment information that can be used to claim a deduction on your taxes.
Student loan interest payments are reported both to the Internal Revenue Service (IRS) and to you on IRS Form 1098-E, Student Loan Interest Statement.
Recently, some federal loan servicers have ended their contracts with the government. If this is the case for your servicer, you will be assigned a new servicer and notified of how to set up an account with them. Pay attention to both your mail and email to find out how to contact your new servicer. You can also check the National Student Loan Data System (NSLDS) to find out who your servicer is and how to get in touch with them.
Complaints Against Student Loan Servicers
Unfortunately, there has been some controversy regarding how federal loan servicers have handled borrowers. For example, a National Consumer Law Center (NCLC) review found that student loan servicers haven't always implemented income-driven repayment appropriately. The NCLC found that only 32 borrowers had their loans canceled—even though at least 4.4 million had been repaying for at least 20 years.
Additionally, an exclusive investigation by NPR found that, historically, some servicers have put borrowers into the wrong repayment plans or had favored putting borrowers into forbearance instead of an income-driven plan that would have benefited them more.
Finally, a report from the Consumer Financial Protection Bureau (CFPB) found that approximately 3,400 of the 5,300 student loan complaints lodged between Sept. 1, 2020, and Aug. 31, 2021, were against federal loan servicers.
In March 2023, the Consumer Financial Protection Bureau (CFPB) issued a supervisory report on unlawful junk fees uncovered in deposit accounts and in multiple loan servicing markets, including in the student loan servicing market. According to the report, customer representatives of some student loan servicers, which had policies against allowing borrowers to pay via credit card, would erroneously accept credit card payments. The servicers would then cancel these payments without offering borrowers the chance to pay again. The servicers would instead claim no payment had been made, which they used to justify charging borrowers late fees and additional interest.
What to Do if You Need Help Paying Your Student Loans
While you're supposed to contact your federal loan servicer for help with student loans, it's important to be prepared before you begin.
First, review the income-driven repayment plan information provided by the U.S. Department of Education. Determine which plan you are eligible for and make sure you understand the terms. That way, when you speak with a customer service representative for your loan servicer, you know what to ask for.
If you have older student loans under the Federal Family Education Loan (FFEL) program, your loans might not be owned by the Department of Education. You might not have access to the same programs and benefits associated with the Direct Loan Program. You can check the NSLDS for information about your servicer and see what programs you might be eligible for.
Next, if you plan to apply for PSLF, make sure to fill out an employment certification form each year. That way, you have a record of the qualifying payments you've made and it will be easier to obtain forgiveness.
Finally, regularly review your information on the NSLDS to make sure everything matches both your records and your account information with your servicer. If you feel like the information is inaccurate or improperly applied, contact your servicer. You can also contact the Federal Student Aid Ombudsman Group for help resolving issues with your servicer.
How Can I Find Out Who Is Servicing My Federal Student Loan?
You can check your Federal Student Aid (FSA) dashboard or log into the National Student Loan Data System (NSLDS) for information on your servicer and how to contact them.
Can I Choose My Federal Student Loan Servicer?
No. The federal government assigns you a servicer. However, if you consolidate your loans later, you can change student loan servicers.
What If My Student Loan Servicer Isn't Helping Me?
If you're having trouble with your student loan servicer, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) or contact the Federal Student Aid Ombudsman Group.
The Bottom Line
Federal loan servicers handle your student loan repayment plan, including billing you and collecting interest. However, in the past, they haven't always provided satisfactory customer service. As a result, you need to diligently monitor your own records and consider filing a complaint if you don't think your servicer is providing you with the help you're entitled to.