Student Loan Servicer Transfer | 08.07.13

Posted in Financial Aid, News, Repayment, Student Loans By Student Loan Network Staff

Federal Student Loan Servicer Transfer

Last week, the United States Department of Education released a newsletter informing students and their schools that federal student loans handled by four nonprofit servicers would soon be transferred to new servicers. Over the next two months, the majority of loans that are currently serviced by COSTEP, EDGEucation, and EdManage will be transferred to MOHELA, while those serviced by KSA Servicing will be transferred to Aspire Resources Inc.

What is a Loan Servicer?

To provide a little background, your loan servicer is assigned to you by the Department of Education after your loan has been fully disbursed. This company processes your payments and works as your customer service representative while you repay your student loans. For additional information on loan servicers, try visiting StudentAid.ed.gov.

Transfer Process

You will receive either an email or a letter in the mail prior to the transfer to inform you if your servicer will change, as well as an additional notification once the transfer is complete. These notifications will provide information on your new servicer, along with a statement that they will be servicing the loan on behalf of the the Department of Education.

You will need to contact the new servicer to activate features such as electronic billing and automatic loan payments. In addition, both MOHELA and Aspire Resources claim that students will not need to reapply for deferment or forbearance if their previous servicer already reviewed their application, but you should contact your new servicer just to make sure that this information carries over.

Impact of Loan Transfers

Many have expressed concern about how this transfer will impact credit scores, but Mark Kantrowitz, financial aid expert and publisher of Edvisors, alleviates this concern. “There is no impact on credit scores.” He states, “The loan is not opened or closed; it is the same loan. There is an automatic administrative forbearance so borrowers will not be reported as delinquent if there is a payment delay as a result of the change in servicer.” However, as stated above, it is important that you re-activate your automatic loan payments in order to ensure that you don’t miss a payment, as this would have a negative impact on your credit score.

A federal student loan transfer is an inconvenience, but its impact on you will be minimal. It really doesn’t take that long to set up automatic payments on your loan again, and you are unlikely to see any major changes in your repayment plan. If you have any questions, try contacting your new loan servicer here.


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