Your student loans are owned by the government or a financial institution like a bank, credit union, or online lender. Who owns your student loans depends on the type of loans you have — federal or private.
Knowing which organization or entity owns your student loans is important for managing your payments, and for anyone who wishes to be an informed consumer. Here’s how to find out who holds your student loan debt.
Table of Contents
Key Points
• Student loan ownership depends on the loan type, with the U.S. Education Department owning federal loans and private lenders owning private loans.
• Loan owners hold legal rights to the loan and receive payments on them, while loan servicers handle billing, customer service, and borrower assistance separately.
• Common federal student loan servicers include Edfinancial Services, MOHELA, Aidvantage, Nelnet, and ECSI.
• The Education Department can transfer loans to new servicers, meaning a new company will handle loan management.
• Private lenders may sell student loans to a new lender, while refinancing by a borrower replaces existing student loans with a new loan from a new private lender.
Who Owns Student Loans vs Who Services Them?
The entity that owns your student loans is not necessarily the same entity that services them. The owner of your loans may partner with a third party known as a loan servicer to manage your loans. The ED typically always uses loan servicers, for example.
The loan servicer handles billing and payments and can also help with repayment options, such as income-driven repayment (IDR) plans for federal loans. Essentially, your loan servicer is your resource for any questions or issues related to your loans, in addition to handling billing and payments.
Overview of Student Loan Ownership
There is both federal and private student loan ownership, and the owner of your student loans depends on the types of loans you have. Federal student loans are typically owned by the U.S. Education Department (ED), while private student loans are owned by the private lender who issued them.
Your loan owner can change if the loan is sold (see more about this below) or if you choose to refinance your student loans. When you refinance, potentially for a lower interest rate and more favorable term, you will get a new lender and loan owner in the process. Just be aware that refinancing federal student loans makes them ineligible for federal programs and protections.
Federal Student Loan Ownership
Federal student loans are owned by the federal government through the Education Department. The ED sets annual and aggregate limits on how much students can borrow, and your school’s financial aid office determines what types of federal loans you may receive and the amount you get, based on your Free Application for Federal Student Aid (FAFSA®) form, the school’s cost of attendance, and any other financial aid you’ve received.
Once you finish or leave school and your loan goes into repayment, your loan servicer takes over all details related to managing your loan’s repayment.
Private Student Loan Ownership
For borrowers with private student loans, these loans are owned by a private lender, such as a bank, credit union, online bank, or other private financial institution. Unlike most federal loans, private student loans require credit checks. The amount you can borrow may be as much as the cost of attendance, but the amount a borrower can actually receive depends on the lender, their credit and debt-to-income ratio, whether or not they have a cosigner on the loan, and other financial factors.
Private lenders may also service your student loans and handle the billing, payments, and customer service themselves. Or, they may opt to work with a third party for loan servicing.
Loan Owner vs Loan Servicer Differences
A loan owner is the owner or holder of your loan. This is the entity that holds the legal right to your loan. They receive the payments on the loan, including the principal and interest. Federal loans are owned by the Education Department, while private student loans are owned by private lenders.
Student loan servicers are hired by loan owners to handle the billing and customer service aspects of student loans. With federal loans, servicers can help you figure out things like which repayment plan you should be on and whether to consolidate your student loans. They can also be a resource if you’re facing financial difficulties and help set you up with deferment or forbearance if you need it. For private loans, servicers handle payments, issues or questions you may have, and communication about your loans.
Identifying Federal Loan Servicers
Your federal loan servicer is typically who you reach out to for anything related to your federal student loans. It’s important to know who services your student loans and how to reach them.
How to Find Your Federal Loan Servicer
Once the ED disburses your federal student loan, they will assign a loan servicer to manage it. The loan servicer will usually contact you directly. That way, when it’s time to start paying back student loans, you’ll know who services your student loans and who to reach out to.
If you didn’t save their contact information, finding student loan servicers is usually simple. Just log into your account dashboard at StudentAid.gov and go to the “My Loan Servicers” section. Or call the Federal Student Aid Information Center (FSAIC) at 800-433-3243.
The ED sometimes moves student loans from one loan servicer to another. This transfer simply means a different company will be handling your loan and helping you manage it. For instance, you could talk to them about different student loan repayment options if you’re looking for another plan.
If your loan is transferred, the new loan servicer will typically inform you of the change by email or letter. Update your payment information with your bank, or adjust the payment method for your monthly student loan bill to make sure your payments go through smoothly. Also, set up an account with the new servicer and double-check that your personal information is accurate so they can reach you if needed.
Common Federal Loan Servicers
These are some of the most common federal student loan servicers:
• MOHELA
• Nelnet
• ECSI
• CRI
Identifying Private Loan Lenders
Determining who owns your private student loan can be a little more complicated. Here’s how to do it.
Checking Private Loan Ownership
There’s no one central website for private student loan servicers like there is for federal loans. To find out who owns your private student loans, you’ll need to individually contact each of your lenders. If you’re not sure who your lender is, consult your original loan documents. The lender should be listed on the documents.
Using Your Credit Report to Identify Loan Owners
Another option is to get your credit report from one of the three credit bureaus. Private lenders usually report loans, including student loans, to the credit bureaus, and your loan servicer should be listed on the credit report.
Why Loan Ownership Matters
Knowing who owns your student loan is critical for managing your student loan debt. The entity that owns your loan determines how your loans are handled and what options you have when it comes to making payments on your loans.
How Ownership Affects Repayment Options
Your options for repaying your student loans are directly impacted by your student loan ownership. If you have federal student loans owned by the federal government through the Education Department, you have more flexibility with repayment options, which currently include income-driven plans that base your monthly payments on your discretionary income and family size, typically resulting in lower payments; as well as the Graduated, Extended, and Standard Repayment Plans.
Federal loans also offer options like forgiveness, as well as deferment and forbearance in cases of financial hardship. And finally, with federal loans, there is a six-month grace period after graduation before your loan payments are due.
Private student loans typically have fewer repayment options. Repayment terms are generally determined by the lender, and payments are typically due once a borrower leaves school.
However, some private lenders require immediate payments on loans after they are disbursed or interest-only payments while a borrower is in school. Others may offer deferred repayment, with a six-month grace period after school. With private lenders, there are usually fewer options for those facing financial hardship, and private loans do not qualify for any of the federal programs or protections offered by federal loans.
What Happens When Loans Are Transferred or Sold
Student loan owners and loan servicers can change. This can happen if your student loan is sold to another company, for instance, or if your loan is transferred to another servicer. In either case, you should receive a notification by mail or email about who your new loan owner or servicer is and where to send your payments.
But even if you miss the notice, it’s still your responsibility to make sure your loan payments get to the new loan servicer or owner by the due date. Make sure to update all your payment information and create an account with the new entity to help the payment process go smoothly.
The Takeaway
If you have federal student loans, the government owns your loans. With private loans, your loans are owned by a private lender. Both entities can use loan servicers to handle payments for your loan, so be sure to find out who your loan servicer is.
The owner of your loan and/or your loan servicer may change over time. Student loans can be transferred to other servicers or sold to other lenders. And if you decide to refinance your student loan — say, because you qualify for a lower interest rate or better term — you’ll get a new lender as part of that process.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
Can student loans be sold to other lenders?
Yes, a lender can sell your student loans. They may do so to free up capital, for instance. Typically, the new owner of the loan will notify you of the change of ownership. Be sure to update your payment information with the new lender.
How can I find out who services my loans?
If you have federal student loans, you can log in to your account dashboard at StudentAid.gov and click on the “My Servicers” section to see who your loan servicer is. For private student loans, contact your lender directly for the information or get a copy of your credit report, which should have the loan servicer listed.
What if I don’t recognize my loan servicer?
If you come across a loan servicer you don’t recognize, it’s a good idea to make sure they’re legitimate. Check with your lender to find out if this is the servicer they’re working with. Don’t give out any personal or sensitive information to anyone you don’t know. Be alert for scammers offering to help you with payments or loan forgiveness. Report anything that feels off or questionable. You can file a complaint online with the Education Department’s Federal Student Aid office.
Does refinancing change who owns your student loans?
Yes, refinancing changes who owns your loans. When you refinance, you replace your old loans with a new loan from a new private lender. That lender becomes the new owner of your loan.
Can your loan servicer change without affecting your loan terms?
Yes, your student loan servicer can change without affecting your loan terms like the total balance, interest rate, and repayment plan. Even though the servicer has changed, the details of your loan remain the same. However, you will have to create a new account with the new loan servicer and make sure your personal and payment information is correct. Also, if you use the autopay option for your loan payments, you will have to set up that option with the new servicer.
About the author
Ashley Kilroy
Ashley Kilroy is a seasoned personal finance writer with 15 years of experience simplifying complex concepts for individuals seeking financial security. Her expertise has shined through in well-known publications like Rolling Stone, Forbes, SmartAsset, and Money Talks News. Read full bio.
Photo credit: iStock/Pla2na
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