Federal Student Loan Servicer Changing? How to Plan Ahead for 2023

Ben Luthi

When you take out federal student loans, the Department of Education assigns a loan servicer to you. Your servicer collects payments, charges fees and provides customer service on behalf of the federal agency.

But federal student loan servicers are private companies that contract with the government, and sometimes one of the parties decides not to renew a contract when it expires. When that happens, there can be federal student loan servicer changes.

If you’ve recently received a notice that your federal student loan servicer has changed or will soon change, here’s what you need to know.

Why are federal student loan servicers changing?

In 2021, the contracts of three federal student loan servicers were set to expire, and the private companies that had contracted with the Department of Education decided not to renew them. That includes:

  • FedLoan Servicing (Pennsylvania Higher Education Assistance Agency)
  • Granite State Management and Resources
  • Navient

The reasons why the three companies decided to end their partnerships with the federal government are unclear. But the result is that millions of federal student loan borrowers will have their student loans transferred to a new servicer if it hasn’t happened already.

That said, things aren’t necessarily straightforward. While Navient and Granite State Management and Resources planned to completely transfer all of their federal loan portfolios to other servicers by the end of 2021, FedLoan Servicing has agreed to continue servicing loans well into 2022, giving borrowers more time to prepare for the switch.

The remaining federal student loan servicers include:

  • Great Lakes Educational Loan Services (New Hampshire Higher Education Association Foundation)
  • EdFinancial (Higher Education Servicing Corporation)
  • MOHELA (Missouri Higher Education Loan Authority)
  • Aidvantage (Maximus)
  • Nelnet
  • OSLA Servicing (Oklahoma Student Loan Authority)
  • ECSI (Educational Computer Systems, Inc.)
  • Default Resolution Group

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When are federal student loan servicers changing?

Both Navient and Granite State Management and Resources were set to complete the transfer process by the end of 2021. Navient transferred its portfolio of federally held loans to Aidvantage, while Granite State loans were transferred to EdFinancial.

Note, however, that Navient still services commercially held federal student loans, which include loans from older programs where the Department of Education was not the loan originator.

FedLoan Servicing has transferred some of its loans to MOHELA, but after extending its contract for another year, it won’t be until the end of 2022 that remaining FedLoan borrowers will see their loans moved to one of the other federal loan servicers.

The servicer will also continue to administer the Public Service Loan Forgiveness program during that time, after which a different servicer will take over.

How could I be impacted by the federal student loan servicer changes?

For federal student loan borrowers whose loans have already been transferred, you likely haven’t noticed any changes yet. This is because President Biden once again extended the student loan payment pause through the end of April 2022. So unless you’ve been making payments during the moratorium period, you may have received a notice, but that’s it.

But there are a handful of ways this switch can impact you, so it’s important to address them:

  • You’ll lose access to your old account: While your loan will transfer to another servicer, the documents don’t always go with it. This can make it difficult to provide proof of past payments, especially if you’re applying for loan forgiveness. Make sure to access your online account and download all of your documents just in case you need them. This also includes any correspondence you’ve had with your loan servicer about income-driven repayment plans, customer service requests and more.
  • You’ll need to set up online access with your new servicer: You’ll need to gather your loan information and sign up for an online account with your new loan servicer. Once you’ve logged in for the first time, add your bank information and set up your automatic payments. Otherwise, you may get slapped with a late fee and potentially a negative mark on your credit report.
  • It could hurt your credit: There have been cases of inaccurate credit reporting with federal student loan servicer changes, so it’s a good idea to review your credit report regularly in the months leading up to and following the transfer of your debt from one servicer to the next. If you find an inaccuracy, you can report it to the credit bureaus and request that they update or remove the information. You can get a free copy of each of your three credit reports through weekly through April 20, 2022, then every 12 months after that. You can also sign up for a free credit reporting service like the ones that Experian or Credit Karma offers.
  • You could get scammed: There are many scammers who prey on student loan borrowers, particularly during times of confusion. You should receive a letter from your new student loan servicer outlining the steps you’ll need to take to continue making payments on your student loans. If you receive a call or email from someone claiming to be able to help you, ignore it. If you have questions, visit your servicer’s website and contact them directly.

What can I do if I’m unhappy with my federal student loan servicer?

Some federal student loan servicers are notorious for providing poor customer service. Just recently, Navient settled a lawsuit with 39 state attorneys general, which included $95 million in restitution payments for 350,000 federal student loan borrowers that the company has allegedly directed into forbearance instead of income-driven repayment plans or loan forgiveness programs.

Other servicers have received thousands of complaints from customers who have experienced a number of problems. If you’ve had a bad experience or you’ve researched your new servicer and have found several complaints, you may be wondering what recourse you have.

The good news is that whether or not you’ve been impacted by recent federal student loan servicer changes, there are a couple of steps you can take if you’re unhappy with your current or new servicer.

Consolidate your loans with a different servicer

While you can’t choose your loan servicer when you first take out loans, you can choose which one you want to work with when you apply for a Direct Consolidation Loan.

The federal consolidation program can also come with some other benefits:

  • You can extend your repayment term to as long as 30 years.
  • Depending on the type of loans you have, consolidation may qualify you for income-driven repayment and forgiveness options that you weren’t eligible for previously.
  • It can combine multiple payments into one new payment for more convenience.

Unfortunately, one thing the federal consolidation program won’t do is help you save money. Instead of giving you the chance to reduce your interest rate, it’ll round up the weighted-average rate of the loans you’re consolidating, then round up that figure to the nearest one-eighth of a percent.

That’s not a huge increase, so it may be worth it if it means a better experience and some of these other benefits. But keep the extra cost in mind before you make that decision.

Refinance your student loans

Refinancing federal student loans isn’t for everyone, especially if you need or anticipate needing access to income-driven repayment plans, generous forbearance options and loan forgiveness programs.

However, in certain situations, refinancing can not only help you get rid of your federal loan servicer, but it can also come with a variety of other benefits, including:

  • Lower interest rates
  • More flexible repayment options
  • Potentially better customer service

Consider the pros and cons of refinancing federal student loans before you proceed, but if it’s a good fit based on your qualifications and goals, refinancing can definitely be worth it.

See How Much You Can Save

Student Loan Refinance Calculator

View Details


Student loan refinancing combines your current loans into a single loan with a new rate and term. See how much you can save by entering your loan information below, or by getting quotes from multiple lenders using Purefy’s rate comparison tool.

Step 1: Enter Current Loan Information

Loan Balance
Your remaining student loan debt to be repaid.
Interest Rate
The amount that the lender charges in interest, expressed as a percentage.
Current Monthly Payment
The total amount of your monthly student loan bill.
Add Multiple Loans to Calculate

Step 2: Enter New Loan Information

New Interest Rate
Your updated interest rate after refinancing student loans.
The length of time you have to repay your student loan debt in full.

Add Multiple Loans

Insert additional loan

Step 3: See How Much You Can Save


Lifetime Interest


New Monthly



Current Loan New Loan Savings
Rate 6.7% 4.2% 2.5%
Lifetime Interest $37,520 $22,210 $15,310
Monthly Payment $1,146 $1,018 $128

Like what you see? Check your actual prequalified rates from the industry’s top lenders in just 2 minutes or less.

Should I refinance my federal student loans to a private lender?

If you’re seriously considering refinancing your federal student loans, it’s important to think through the process and the potential results carefully before you proceed.

Student loan refinancing involves replacing one or more existing loans with a new one through a private lender. You can refinance federal loans, private loans and even both together.

Refinancing typically requires a credit score in the mid-600s and an income of $40,000 or more. But if you want to secure the best terms possible, you’ll want a credit score in the 700s and an annual income nearing six figures.

According to Purefy data, the average FICO score of student loan refinance borrowers is 774, and the average annual income is $98,156.

For a deeper dive, take a look at both the benefits and drawbacks of refinancing to decide if it’s right for you.

Benefits of student loan refinancing

There are many benefits associated with refinancing your student loans. Here are some of the most prominent ones to consider:

  • Lower interest rates: Student loan refinance interest rates can be much lower than some federal or private student loan interest rates. If you qualify for the lowest rates, either on your own or with a cosigner, you could save thousands of dollars in interest. For example, let’s say you have $30,000 in student loans with a 10-year payment period and a 6.5% interest rate. If you were to refinance that debt with a 4% interest rate and the same repayment term, you’d save $4,429 in interest over the life of the loan.
  • Flexibility with payments: If you can score a lower interest rate, you’ll likely also have a lower monthly payment. But you can also reduce your monthly payment by opting for a longer repayment period. In contrast, you could request a shorter repayment term, which could result in you paying off your debt faster. Either way, you can choose which repayment plan works for you, as refinance lenders can offer terms ranging from 5 to 25 years. The only options for federal loans besides the standard 10-year plan are 20 years and beyond.
  • Better features: Some student loan refinance lenders offer solid features, such as unemployment protection, interest rate discounts on other products and more. You may also find a private lender that offers better customer service than a lot of federal loan servicers. And the best part is that you can shop around and compare multiple lenders to find the right fit for you.

Drawbacks of student loan refinancing

While there are clear benefits to refinancing your student loans, there are also some potential drawbacks you’ll want to keep in mind as you decide the right path for you. In particular, here’s what you should know:

  • It can be tough to get the best terms: Again, student loan refinance lenders can offer low interest rates, but you’ll need to do far better than their minimum credit and income requirements to qualify for them. You can always apply with a cosigner to help improve your chances of getting a low rate, and some lenders offer cosigner release after you meet certain criteria. But even then, it might not be enough to get what you want.
  • You’ll lose federal benefits: Dealing with federal student loan servicers can be challenging. But the federal government offers benefits that you simply can’t get with refinance lenders. That includes access to income-driven repayment plans, which can reduce your monthly payment to a percentage of your income, as well as loan forgiveness programs, which can wipe out some or all of your debt. It also includes generous forbearance and deferment options that can exceed what private lenders offer. If you think you might take advantage of any of these, it may be best to keep your loans where they are.
  • A longer term will increase your costs: This is also true if you extend your federal student loan repayment term through consolidation or income-driven repayment, but it’s especially important to consider if you’re refinancing since the primary goal is to save money. If you opt for a longer repayment period, you could end up paying hundreds or even thousands of dollars in additional interest charges.

Because every situation is different, it’s important to know what your current circumstances are, as well as your goals, to help decide if refinancing your student loans is the right move.

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Why current student loan refinance rates are so low

Since the beginning of the coronavirus pandemic, interest rates for student loan refinancing have seen record lows. This is primarily due to the Federal Reserve’s decision in March 2020 to cut its federal funds rate to near zero, along with its decision to keep the rate low ever since.

The federal funds rate is the rate at which banks charge each other interest for overnight reserve requirements. It’s also a benchmark that lenders use to determine their prime rate. This rate acts as an index for short-term interest rates, which can include student loans, personal loans, credit cards and other forms of financing.

Because the underlying index rates have been so low, so have the rates lenders use to determine how much to charge borrowers.

It’s also the reason why now might be the best time to refinance student loans. Federal Reserve officials and economic experts have discussed the idea of the Federal Reserve increasing rates again in 2023, which means that refinance rates will start going back shortly thereafter.

That said, it’s important to consider the fact that the student loan payment pause is still in effect on federal student loans until Summer 2023. It’s unclear whether the Biden administration will extend the moratorium again. 

If you’ve been taking advantage of the payment pause to get back on your feet financially, now might not be the best time to get rid of that benefit. But if you’re financially able to start making payments again soon, it could be beneficial to take advantage of the record-low interest rates before they start to increase again.

How to compare best student loan refinancing rates

Student loan refinance lenders can provide you with an opportunity to save money on interest charges, but not all offers are created equal. As a result, it’s important to take your time to shop around and compare interest rates and other terms to ensure that you get the best deal possible. Here are some tips to help you maximize your savings:

  • Use Purefy to compare rates: Student loan refinance companies typically allow you to get prequalified through their websites. This process doesn’t require a hard credit check, but it can give you an idea of what your interest rate might look like. But going through that process with each lender individually can be time-consuming. Instead, consider using Purefy’s Compare Rates tool to get prequalified with several lenders at once. You’ll also be able to compare their offers side by side for more convenience.
  • Compare apples to apples: There are two types of interest rates you’ll come across: fixed and variable. Variable interest rates typically start off lower, making them more appealing. But over time, those rates can fluctuate with market rates, and because interest rates are expected to rise in the future, you could end up paying more. Fixed rates start off higher, but they don’t change throughout the life of the loan, giving you more certainty. As you compare interest rates, make sure you’re comparing the same type of interest rate.
  • Consider other terms: While interest rates are important, they’re not the only thing you’re getting when you refinance your student loans. Make sure you look into each lender’s other features, such as repayment terms, deferment and forbearance options, unemployment protection, customer satisfaction, discounts and more. The more information you have about each offer, the easier it will be to pick the right one for you.

As you compare different refinance lenders, it’s also important to compare what you’re getting with what you currently have. If, at any time, you decide that refinancing isn’t right for you right now, take a step back and reconsider.

While now can be an excellent time to refinance your student loans, it might not be worth it if the overall drawbacks outweigh the benefits.

The Bottom Line

If you have federal student loans, you may have recently gone through a change in your federal loan servicer. While this process doesn’t generally have a big negative impact on your student loans, there are some things you’ll still want to do to make sure the process goes smoothly:

  • Log in to your account with your old servicer and download all of your documents and correspondence.
  • Set up an online account with your new servicer and add your bank account for automatic payments.
  • Monitor your credit regularly for potential mistakes that could damage your credit score.
  • Watch out for scammers who are trying to take advantage of the confusion surrounding federal student loan servicer changes to steal your personal information or money.

If you don’t like your new servicer, the good news is that you have a couple of options. The first is to consolidate your loans with another federal loan servicer, and the second is to refinance your loans with a private lender.

If you consider refinancing your loans, take your time and do some due diligence to determine if it’s the right decision for you. You’ll want to think about both the advantages and disadvantages of refinancing and how they compare to keeping your loans in the federal student loan program.

You’ll also want to shop around and compare different offers to ensure that you get the best deal that’s available to you.

The important thing in all of this is to think about how you want to pay off your student loans and research the different tools and strategies that are at your disposal. There’s no right answer for everyone, but knowing your situation and your goals will give you all of the information you need to make an educated decision.

And keep in mind that your decision right now may not necessarily be the right decision down the road. Make sure you reevaluate your approach to your student loans every year or so to determine if you’re still on the right track.

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Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 01/01/2023. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.

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Fixed rates range from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 5.09% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.

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Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.64% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 4.64% APR to 9.19% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.

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Fixed Rate Loan Terms: 5 years/60 monthly payments, 7 years/84 monthly payments, 10 years/120 monthly payments, 15 years/180 monthly payments, or 20 years/240 monthly payments. Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. This rate is expressed as an APR. Fixed APRs range from 6.94% to 11.58% APR [low to high range with 0.25% auto-debit rate reduction]. Rates are subject to change without notice. Fixed rates will not change during the term. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan including a 0.25% auto-debit rate reduction. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. All estimates are based on information provided by you and are for informational purposes only, accuracy is not guaranteed and may not reflect actual rates or savings and do not constitute an offer of credit. Your actual rate, payment and savings may be different based on credit history, actual interest rate, loan amount, and term, including your cosigner [if applicable]. If applying with a cosigner, we use the higher credit score between the borrower and the cosigner for approval purposes. All loans are subject to credit approval.

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