Home » Student Loan Repayment

What to Do If Your Student Loan Servicer Gets Fired

Editor's note: On July 8, 2021, FedLoan Servicing notified the Department of Education that it no longer wished to service federal student loans beyond the expiration of its contract in December 2021. Since MOHELA uses the COMPASS™ system developed by FedLoan's parent company PHEAA and also uses PHEAA subsidiary AES as a backup servicer, it makes sense that MOHELA was chosen to take over management of the PSLF program from FedLoan Servicing.

There have been major student loan servicer changes in recent years. The U.S. Department of Education’s Office of Federal Student Aid (FSA) announced it signed contracts with five companies to service federal student loans beginning in 2024. This includes four existing loan servicers: MOHELA, Nelnet, EdFinancial and Aidvantage.

You might notice that Navient and FedLoan Servicing aren't included on this list as they exited loan servicing during the COVID-19 payment pause. Navient accounts were transferred to AidAvantage and FedLoan borrowers pursuing Public Service Loan Forgiveness (PSLF) were transferred to MOHELA. However, some of our non-PSLF clients had their loans moved from FedLoan to Nelnet.

All this to say, your loans may change student loan servicers in the future.

As the singer Jimmy Dean once said, “I can't change the direction of the wind, but I can adjust my sails to always reach my destination.” Get ready to adjust your sails, but don’t break a sweat just yet, though. Let’s talk through it.

Transitioning loan servicers is currently the biggest student loan change

This upcoming change isn’t the first of attempted improvements to the federal student loan servicing system. Back in March 2019, there were updates to the FSA ID log-in system making it easier to access account information.

In late-February 2020, the new streamlined studentaid.gov website launched which consolidated all student loan and debt aid resources into a single, more user-friendly site.

Now, the Department of Education has set its sights on a BIG objective that borrowers have been longing for. This includes improved customer service, and holding servicers accountable for their performance in managing federal student loans. Former Education Secretary Betsy DeVos believes this goal starts with firing the old four major servicers and replacing them.

A loan servicer is a company that we assign to handle the billing and other services on your federal student loan on our behalf, at no cost to you. Your loan servicer will work with you on repayment options (such as income-driven repayment plans and loan consolidation) and will assist you with other tasks related to your federal student loans.” – Federal Student Aid website

Unfortunately, many servicers have not handled their job very well, and we doubt this change will improve anything.

Who are the new student loan servicers?

The five new companies chosen by the Biden Administration Department of Education to take over this responsibility in 2024 are:

  • Edfinancial Services LLC
  • Aidvantage (MAXIMUS Federal Services Inc.)
  • Missouri Higher Education Loan Authority (MOHELA)
  • Nelnet
  • Central Research, Inc

Note that current loan servicer OSLA didn't receive a new contract for the upcoming year.

MOHELA actually uses the COMPASS software developed by PHEAA to manage its student loan accounts. PHEAA is the parent company of the previously troubled FedLoan Servicing. So, it makes sense it took over managing the Public Service Loan Forgiveness program from FedLoan.

Otherwise, rather than improving servicing for borrowers overall, we view this as giving the job to smaller and less experienced companies that would use similar software as the existing companies have used.

Loan servicer transitions are often pure chaos. But that chaos doesn’t have to affect you though.

Related: Central Research Student Loans: What to Know About the New Federal Servicer

Get Started With Our New IDR Calculator

The difference between your loans being transferred vs. sold

Your student loans aren’t being sold with this impending servicer change. Instead, your federal loan servicer’s contract with the Department of Education may just be expiring. The Department hires a company and assigns them the duty of handling your billing and other services on your federal student loan(s) on its behalf through a servicing contract.

Many of our readers have experienced loan servicing transfers at some point and tell us that their loans were “sold”. Again, not the case, but that IS what it can feel like.

When your student loan servicer changes, there’s an unavoidable disruption. You have to create a new user/password for the new company’s online portal. You’ll need to update billing information for automatic payments. Your monthly due date may change. Everything is new and different.

Sometimes, these changes can result in lower income-driven repayment (IDR) enrollment success rates due to transition hiccups or processing delays. This generally translates into higher default rates.

What to expect if your student loans are transferred to a new servicer

According to studentaid.gov, if your loans are transferred to a new servicer, student loan borrowers can expect the following:

  • You’ll receive an email or a letter from your assigned servicer to inform you about the transfer.
  • You’ll receive a welcome letter from the new servicer after the new servicer receives your loans. This notice will provide you with the new servicer’s contact information and inform you of the actions you may need to take.
  • All of your loan information will be transferred from your assigned servicer to your new servicer. But you may only be able to see online information that covers the period since your new servicer took your loans over.
  • There’ll be no change in the terms of your loans.
  • Your previous loan servicer and new loan servicer will work together to make sure all payments you make during the transfer process are credited to your loan account with the new servicer.

That’s nice language. But, in practice, we have seen very poor performance with accurate record-keeping whenever an old servicer sends loans to a new one. For example, when a borrower submits an ECF form for the PSLF program.

What to do after receiving a welcome letter from your new servicer

Student loans can bring with them a significant amount of anxiety on their own. Getting a welcome letter from a new servicer adds a new layer of stress. Here’s what to do to ensure a smooth transition:

  • Begin sending your student loan payments to your new servicer. If you use a bank or bill-pay service to make your loan payments, update the new servicer’s contact information with the bank or bill-pay service.
  • Follow the new servicer’s instructions for creating an online account so that you can easily communicate with the new servicer and keep track of your loan account.

Student loan servicer chaos likely caused another extension of the pandemic student loan relief

We predicted the extension of the payment pause due to the impending elimination of FedLoan Servicing. Otherwise, borrowers would have had to update their contact information twice.

Repayment will begin August 30, 2023. Secretary of Education Cardona dubbed this as the “final extension.”

For PSLF borrowers: Download your payment history

FedLoan Servicing, a branch of the Pennsylvania Higher Education Assistance Agency (PHEAA), retained the role of exclusive PSLF servicer through 2022. But PSLF is now the responsibility of MOHELA.

PHEAA used the loan servicing software known as COMPASS. MOHELA, one of the five companies awarded a new servicing agreement, uses COMPASS as well. So, long-term, MOHELA was a good FedLoan replacement candidate.

Since loan servicer transfers happen frequently, we recommend saving a PDF or taking pictures of your payment history and saving it to the cloud by the end of the year. Don’t stress about this proof though. A servicer change won't affect your NSLDS record. It shows your PSLF payment count up until the last time you submitted an Employer Certification Form (ECF). To be safe, go ahead and submit a new ECF form by November 1 to get your PSLF payments counted to-date as well.

You can also download up-to-date information on all of your federal loans on studentaid.gov through the “My Aid” page. Click on “My Aid Data.” This information is what we typically ask our clients to reference to verify information on their loan types, loan origination dates, interest rates and other information.

We’ll watch out for information on how the TEPSLF program and FSA Ombudsman Group appeals might be affected by student loan servicer changes.

For non-PSLF borrowers

We have historically recommended using Great Lakes as a servicer if you’re not pursuing PSLF, because our surveys found that Great Lakes has much higher satisfaction scores at 3.8 out of 5 stars. But Great Lakes isn't an option anymore as it transferred all accounts to Nelnet. That said, Nelnet scored a respectable 3.3 out of 5 stars on our surveys.

For reference, Navient and FedLoan both scored much lower at around 2.2 out of 5. So, it's arguably good news that they aren't federal loan servicers anymore.

So what happens if your new servicer is a lot more like Navient and FedLoan, and less like Great Lakes or Nelnet?

Answer: Don’t panic.

If you don’t have problems or lots of questions, then your loan servicer probably won't matter much. In other words, if you don't call them, you’re in good shape.

Otherwise, you'll get really confused, like when a client told us they talked to FedLoan’s PAYE department (which doesn’t exist). Or when a Navient representative told our client that they didn’t need to submit an ECF form for PSLF until after working in public service for five years.

Whomever your servicer becomes, keep in mind that they exist to collect on your student loans and handle simple stuff. Advanced repayment strategies will be outside of any of these new companies’ wheelhouses.

They’re not obligated to help you find the best student loan repayment options for you. That’s why it can be really helpful to hire a third-party expert like Student Loan Planner. We can help you navigate through your options and find the best student loan payoff plan for your individual situation. You don’t have to do this alone and there is an optimal solution to your problem. We’re here to help.

Borrowers with FFEL or private loans likely unaffected

These servicer changes won’t affect you if you have FFEL or private student loans.

Your FFEL loans might continue to be bought and sold. But most FFEL borrowers are better off consolidating their loans into Direct Loans. If you do that anytime in the next few months, your new consolidation loans would probably move over to a new servicer.

Private student loans generally don’t change servicers like federal ones seem to do.

Refinancing student loans to avoid a servicer change

If you don’t want to deal with this servicer switch and there’s little to no benefit in keeping your loans federal (i.e. no forgiveness opportunity available to you and you don’t rely on the flexibility of IDR plans), it might make sense to refinance to simplify your situation.

Check out our cash-back refinancing offers for favorable interest rates and terms that can work for you.

Just wait to do this until the payment and interest freeze ends.

Obviously, don’t even consider this option if taxable or PSLF forgiveness is a better long term strategy.

You’d much rather have a lousy servicer and get to pay 10% of your income on student loan debt that’s much larger than your income, than pay thousands of dollars a month to a competent student loan servicer.

Why you don’t need to worry about your servicer changing

If your federal loan servicer changes, you don’t need to panic or worry. Your monthly payment and student loan forgiveness credit gets tracked in the NSLDS files found on studentaid.gov.

Your servicer actually pulls data from the federal database. Sometimes it makes mistakes, which can be corrected with a complaint to the CFPB or an email to your Senator or Congressperson.

I’m confident we’ll see a ton of questions about servicer changes from clients and readers. That’s because I’m confident the Department of Education will manage changeover very poorly, if history is any guide.

Refinance student loans, get a bonus in 2024

Lender Name Lender Offer Learn more
$500 Bonus
*Includes optional 0.25% Auto Pay discount. For 100k or more.
Fixed 5.24 - 9.99% APR*
Variable 6.24 - 9.99% APR*
splash logo
$1,000 Bonus
For 100k or more. $300 for 50k to $99,999
Fixed 5.19 - 10.24% APPR
Variable 5.99 - 10.24% APR
$1,000 Bonus
For 100k or more. $200 for 50k to $99,999
Fixed 5.19 - 9.74% APR
Variable 5.99 - 9.74% APR

Not sure what to do with your student loans?

Take our 11 question quiz to get a personalized recommendation for 2024 on whether you should pursue PSLF, Biden’s New IDR plan, or refinancing (including the one lender we think could give you the best rate).

Take Our Quiz


  1. Shelley Kaus July 3, 2020 at 2:08 PM

    As someone planning to apply for PSLF in December 2020, I feel a little panicked! Any thoughts as to how this will impact me?

  2. Shelley Kaus July 3, 2020 at 2:09 PM

    As someone planning to apply for PSLF in December 2020, I feel a little panicked! Any thoughts as to how this will impact me?

    • Amy at Student Loan Planner July 7, 2020 at 1:05 PM

      I don’t blame you, it’s a crazy time to attempt this. We have several articles in the works about exactly how the change will impact borrowers, especially those pursuing PSLF – stay tuned. If you’re signed up for the email list, Travis will keep you updated as he finds out more.

  3. Tyler King July 4, 2020 at 2:45 PM

    If I just graduated in May and already consolidated and enrolled in PAYE (PSLF job started July 1st 2020), would you say to submit the ECF form as soon as possible, way before November 1st? Currently with Great Lakes and don’t want to undergo three servicer switches.

    • Amy at Student Loan Planner July 7, 2020 at 12:58 PM

      Since you don’t yet have a full qualifying month of employment for PSLF, you could hold off. I can understand not wanting to change servicers 3x. If you did submit it now, keep in mind there’s no guarantee the new servicers are going to be hired, so it might not be an issue.

  4. Blaire July 17, 2020 at 9:59 PM

    Wonderfully informative article. I am looking to consolidate my students loans to lower my monthly payments, but I don’t want to change servicers twice (and possibly be re-assigned to a difficult servicer. I know that they are not all created equal!) Should I hold off to see if this change actually goes through? I am looking to consolidate under Great Lakes.

    • Amy at Student Loan Planner July 22, 2020 at 4:46 PM

      Consolidating now might make more sense – then if the servicers do change, you’ll only have one loan to keep track of instead of several. Either way, it’s going to be a mess.

Comment or Ask a Question

Your email address will not be published. Required fields are marked *