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First off, we should define what a servicer is. Many use servicer and lender interchangeably, but a servicer helps you manage the loan, while a lender is the one who gives you the loan and sets the terms. With that in mind…

Servicers CAN change…

Although federal student loans are disbursed by the federal government, they are not handled by the government authorities themselves. Instead each student’s loan is assigned to a specific loan servicer who is responsible for handling all services associated with your federal student loan.

…but YOU don’t get to choose who or when

While your loan servicer may change during the life of the loan, the Department of Education clearly states that borrowers have no say in the matter. They do not get to select their loan servicer at the time of taking the loan, neither do they get to change the servicer at any time during the life of the loan.

In most cases this may not matter as most loan servicers will handle your loan professionally and in accordance with the terms laid down by the federal government. However, this is bad news for those unlucky enough to be stuck with an unprofessional loan servicer who does not provide them with the advice or information they need to avoid a potential loan default.

No matter how unhappy you are with your loan servicer, you cannot formally apply for a transfer. However, you can get your loan transferred by other means. Consolidating your federal student loans, signing up for public service loan forgiveness or refinancing with a private lender will automatically get your loan transferred to another servicer. You must be very careful and understand the pros and cons before you choose any of these options. Only consider it if any of these alternatives works out beneficial to you. Don’t do it only to get your loan servicer changed as you could lose out on other benefits that the loan offers.

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