Best Federal Student Loan Servicers in the United States
As a student, it’s important you know the Best Federal Student Loan Servicers. though you won’t often have it your way. The reason is because the government chooses your student loan servicer for you. This is when you first take out your federal student loan. Let’s tell you more!
Federal Student Loan Servicers
A federal student loan servicer is the middleman between you and the federal government, which loaned you money for college. Getting to know your servicer is the secret weapon in the fight to get rid of your loans.
Student loan servicers collect your student loan bills and keep track of whether you settle them on time. They also assist borrowers in switching repayment plans, certifying for forgiveness programs, and signing up to postpone loan payments.
Your servicer’s job is to assist in keeping your loans in good standing by giving you the support and resources you need.
But they’re also private companies, which means they may present choices that are not necessarily in the borrower’s best interest. You must be your own promoter by knowing your repayment options and asking questions.
How to Find Your Federal Student Loan Servicer
If your loan payments haven’t started or you’re not sure who your servicer is, log in to My Federal Student Aid to find out. You’ll have to create an FSA ID to sign in.
Then you can visit your servicer, view loan details, apply for a direct consolidation loan, or sign up for an income-driven repayment plan.
Knowing your student loan servicer’s identity— and feeling comfortable contacting the company — is the first step toward getting ahead of your loans. You can keep in touch with all of the loan servicer contact centers by calling 1-800-4-FED-AID.
All loan servicers offer similar assistance and services. But if you’re having trouble with yours, you may want to make a change. There are only a few ways this can happen. Pick a goal below to determine your best option
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Functions of Federal Student Loan Servicers
Below are some of the functions of loan servicers. Keep them in mind to stay informed.
Collect and Keep Track of Your Payments
Loan servicers manage student loans on behalf of the federal government and private lenders. So while you may have a federal student loan, you’ll work with a private company to settle it.
Your servicer will reach you after the first federal loan is paid out to you. Enrol for an account on its website right away, so you can keep track of how much you’ve taken out and how much interest adds up while you’re in school.
You can also utilize your online account to pay off the interest that has accrued before it capitalizes, or is added to your total balance at the end of the student loan grace period.
Six months after you leave school your first bill will come. Sign up for automatic monthly charges so you’re less likely to fall behind on your loans. However, be sure you have enough money in your bank account each month to cover the cost.
Help You Choose or Switch Repayment Plans
Your servicer will put you on the 10-year standard student loan repayment plan unless you pick a different one during your exit counseling session around the time you leave school.
The standard plan breaks up your balance into 120 fixed charges. However, that may be difficult to afford if you have a lot of debt.
Student loan servicers can assist you in figuring out if you’re eligible for one of the government’s income-driven repayment plans, which cap your bills at a percentage of your income.
See what you’d pay on an income-driven plan using the government’s student loan repayment estimator software.
If you decide to switch, your servicer will process your application and annual income recertification, which you must submit to stay qualified.
Customize Your Loan Payments
Once you begin earning enough money to pay extra toward your loans, you might want to pay off certain loans first — like the ones with the highest interest rates, which will help you save money in the long run.
Contributing more than your scheduled payment will lower both your overall balance and the interest you pay over time, so kick in a little more than you need to when you can.
Call, email, or pen your servicer a letter instructing it how to apply additional money. Otherwise, they may apply extra payments toward your next month’s invoice.
Process Your Requests for Deferment or Forbearance
During your repayment term, there may be times when you can’t afford your loan bill. Call your loan servicer to let them know as soon as possible.
You can apply for deferment or forbearance, temporary postponements of your payments during times of financial difficulty.
The federal government made all student loans eligible for interest-free forbearance in March 2020 as a pandemic emergency palliative. It has extended the payment pause many times since then.
Help You Certify for Loan Forgiveness
You may be qualified for student loan forgiveness if you work in certain fields for a period of time.
To ensure you’re on track to get the benefit, your servicer can help you determine whether your loans are eligible, whether you’re on a qualifying repayment plan, and whether you’ve properly filled out any certification forms.
Applying for a student loan forgiveness program could imply changing loan servicers.
For example, the servicer MOHELA will become your servicer if you apply for the Public Service Loan Forgiveness program, which forgives the remaining balance of your loans after you make 120 payments while working at a nonprofit or for the government.
As of November 2022, MOHELA operates all loans enrolled in PSLF. MOHELA began migrating loans from PSLF’s prior servicer FedLoan Servicing in July 2022.
The transfer process was automatic and did not alter the existing terms or forgiveness plans available on the loans. FedLoan is no longer functional; its government contract ended on Dec. 14, 2022
Once you initiate the process of certifying your eligibility, your loans will be transferred to MOHELA if it’s not already your servicer. Discover more about forgiveness programs and how to apply.
Which Federal Student Loan Servicer is the Best?
For a number of reasons, it is hard to say who the best federal student loan servicer is. As cited above, you generally cannot request a new student loan servicer. Below are some of the best federal student loan servicers:
Cornerstone
This is one of the best federal student loan servicers. This is the Utah System of Higher Education, also known as Cornerstone.
You could be assigned Cornerstone as your service regardless of which state you live in. Cornerstone ended up with 25 complaints over the past year.
That sounds pretty good. But going with the 600,000 customer estimate again, that comes out to 42 complaints per million customers, which is twice as many complaints as the next two loan servicers on our list.
HESC / EdFinancial Services
This is also one of the best federal student loan servicers. Also, it’s known as EdFinancial Services. It ended up finishing in a dead heat with Granite State in customer complaints.
Both had 13 complaints filed with the CFPB over the past year. That’s only about 22 complaints per million customers.
While that sounds pretty good, you may still run into issues with HESC if you’re assigned to it as your servicer.
In Student Loan Planner’s own survey from the summer of 2018, only two respondents had their loans with HESC. Both responses were negative.
Granite State
As mentioned above, Granite State Management & Resources, or GSM&R Student Loan Servicing, ended up tying with HESC in the number of complaints customers submitted to the CFPB.
This is also one of the best federal student loan servicers. At a rate of 22 complaints per million customers, that’s nearly 30 times fewer complaints per customer than Navient.
OSLA
The Oklahoma Student Loan Authority (OSLA) is a loan servicer that has been around since the 1970s. And they seem to know what they’re doing. Only 11 OSLA customers filed complaints with the CFPB over the past year.
Again, your chances of having OSLA as your servicer (or any nonprofit servicer for that matter) are small. But if you are assigned to OSLA, consider yourself very lucky. It’s also one of the best federal student loan servicers.
MOHELA
This is also one of the best federal student loan servicers. The Higher Education Loan Authority of the State of Missouri (MOHELA) is the first nonprofit federal student loan servicer to make it onto our list, narrowly squeaking ahead of Nelnet.
There tends to be a naturally positive correlation between the number of loans a company services and the number of complaints it gets.
And this isn’t just the sheer number of complaints (which would obviously be expected), but the percentage of customers who make complaints as well.
In other words, smaller loan servicers not only have fewer total complaints but also tend to have fewer complaints per customer.
This is probably because servicers who have fewer customers are able to give the ones they have better customer service and attention.
Nelnet
This is also one of the best federal student loan servicers. If you were assigned Nelnet as your student loan servicer, please note.
You could look at it in two ways: On one hand, you could be bummed that you’ve been assigned one of the “Big Four.” Also, you could be thankful you weren’t assigned FedLoan or Navient.
Although it has had its own fair share of complaints, Nelnet customers tend to be much happier on the whole.
In total, Nelnet received 120 complaints per million customers over the past year. Not terrible for a company that services over 19% of all student loans.
However, that’s still a significant number of complaints, though. If you’re wondering what Nelnet customers tend to feel frustrated about, you may want to read the most common complaints about Nelnet.
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The Bottom Line
With respect to our somewhat limited data, it is difficult to determine exactly which federal student loan servicer is best.
Not-for-profit servicers appear to be rated better in general, despite being oblivious of how many borrowers they have.
Keep in mind though that you cannot alter your servicer unless you refinance – or your student loans are sold to a different servicer.
Anyone who is considering refinancing should analyze repayment options first, as refinancing with a private lender may mean giving up federal student loan protections.
Note that the assessment is based on several factors. One such factor is the level of complaints leveled against these services.
Thus, it’s important you note that this ranking may change in the future. For now, this is how it stands. Though they were not arranged serially.
