Can you transfer student loans to another lender?
This question is about student loans.
Do you hate your student loan servicer’s user interface? Have you had a negative experience with customer service? I personally had a really negative experience with FedLoan Servicing.
Unfortunately, it is all too common that Federal student loan servicers struggle to meet borrowers’ ongoing needs. While borrowers have complaints about every public loan servicer, you could find a better servicer through one of these methods.
Note: If the Department of Education moves your loan servicer without you, see this: What Happens When Your Student Loan Servicer Changes.
Transfer Federal Loans: Consolidation
When you consolidate your Federal student loans, you get to pick your loan servicer. You can apply for Federal loan consolidation at StudentAid.gov, and pick your servicer at the end of the process.
The loan servicers that service Direct Consolidation Loans include:
Note: Fedloan, Navient, and GSMR were all previously loan servicers, but no longer service Federal student loans. Learn why loan servicers are dropping out here.
Consolidating student loans allows borrowers to extend the length of loan repayment (in some cases), reduce monthly obligations to a single payment, and retain all the benefits of Federal loans (such as income-driven repayment plans).
This is the most direct method for changing servicers, so it’s worth a consideration if you’re struggling with your current lender.
Special Case: Public Service Loan Forgiveness
Another path away from your current servicer could be applying for Public Service Loan Forgiveness (PSLF). PSLF is a program where the government forgives your remaining Federal student loans after 120 payments where you’re working full-time in a public service (non-profit or government) capacity.
If you qualify for PSLF, your loans will be transferred to MOHELA. You can learn more details about PSLF at the U.S. Department of Education’s website.
Special Case: Disability
The penultimate method to change loan servicers is probably the least desirable. If you’re eligible for a total and permanent disability discharge, the discharge will be processed through Nelnet. The application for TPD is here.
Nelnet has a lot of great and easy-to-understand information about TPD, so be sure to check out the site if you think you may qualify.
Transfer Private Student Loans: Refinancing
If you have private loans and want to move lenders, you simply refinance with a new lender. But this process also applies to Federal loans (it's usually just not the best idea).
Before doing this with Federal loans, you need to be confident that you can easily make the required payments on a standard 10-year repayment plan. You should also have the income or credit score necessary to reduce the interest rate on your student loans. Be sure to compare rates at multiple lenders before making the switch.
Here's our list of the 10 Best Places To Refinance Your Student Loans.
People Also Ask
Can you transfer your student loans to another person?
Generally, no. However, you may be able to refinance from one person to another if the other person agrees and the bank will offer the loan. Though we've never seen this in practice.
Can you transfer your student loans to a personal loan?
Yes, though it's not recommended. A personal loan can be a qualified education loan (and eligible for tax deductions) if it only has education loans inside of it. But if you commingle a student loan with other loan types (like credit cards or car loans), you'll lose the educational loan status, along with any tax benefits.
Why was my federal student loan transferred?
All federal loans are owned by the Department of Education, and they assign them to loan servicers based on need and capability. As loan servicers change, your loan may be transferred to a new loan servicer.
Related Articles
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared toward anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications, including the New York Times, Wall Street Journal, Washington Post, ABC, NBC, Today, and more. He is also a regular contributor to Forbes.
Editor: Clint Proctor Reviewed by: Colin Graves
