Nelnet, one of the nation’s largest student loan servicers, agreed to purchase a competitor student loan servicer, Great Lakes Higher Education Corp., for $150 million in an all-cash transaction.
The move will make Nebraska-based Nelnet the largest servicer of federal student loans, and represents a significant consolidation in the student loan servicing sector.
With this transaction, Nelnet/Great Lakes, Navient and FedLoan Servicing (PHEAA) become the three dominant student loan servicers who collectively service over $1 trillion of student loans.
So what does this acquisition mean for your student loans?
Here’s what you need to know.
What Is A Student Loan Servicer?
Think of a student loan servicer as providing both customer service and repayment support during the life of your student loan.
Student loan servicers play an intermediate role between a borrower and a lender. They process monthly student loan payments, manage borrower accounts and answer borrower questions.
If you borrow a student loan, your lender may not be the entity that manages your student loan after it is disbursed. While some companies act as both a lender and servicer, often times a separate company will service your loan.
A loan servicer will also work with you for free on student loan repayment plans and student loan consolidation.
It is possible – and more common today – that your lender (either the federal government or a private lender) transfers your student loan to one or more servicers while your student loan is in repayment.
You don’t need to worry if you receive a notice that your student loan has been transferred to another servicer. It is not a reflection of you or student loan.
If this happens, you should contact your new student loan servicer and update your bill pay information if you use autopay (which you should). Also, if your student loan is transferred to a new student loan servicer, there are no changes to your loan terms.
How Will This Acquisition Affect Me As A Student Loan Borrower?
The companies said they do not expect borrowers to experience any change in service as a result of the acquisition.
The transaction is expected to close January 1, 2018, pending regulatory approval. Following the transaction, the companies expect to operate under their respective names and brands. Each company has a federal student loan servicing contract with the U.S. Department of Education that will expire in 2019.
According to the the U.S. Department of Education Office of Federal Student Aid, as of June 2017, Great Lakes and Nelnet had the two highest borrower satisfaction ratings among the nine major student loan servicers.
Can I Choose My Student Loan Servicer?
No. Your student loan servicer is assigned to you.
If you have a federal student loan, the U.S. Department of Education will assign you a student loan servicer after your student loan is disbursed. Similarly, if you have a private student loan, your lender will assign a student loan servicer.
What If Great Lakes Is Your Student Loan Servicer?
If Great Lakes is your student loan servicer, you still have to make your student loan payments in the normal course.
For more information regarding the acquisition, you can contact Great lakes by phone at 1-800-236-4300.
Can I change my student loan servicer?
Generally, you cannot change your student loan servicer.
However, you should expect that your student loan servicer will change at least once during the course of your student loan repayment. Why? The U.S. Department of Education may transfer your federal loan to a new student loan servicer to ensure that you have proper customer service and repayment support.
One way that you can change your student loan servicer is through student loan consolidation.If you consolidate with a Federal Direct Consolidation Loan, your existing student loans are combined into a single student loan with a single student loan payment. However, your student loan interest rate does not decrease through student loan consolidation.
When you consolidate your student loans, you can choose one of four student loan servicers: Navient, Nelnet, Great Lakes or FedLoan Servicing. There is no guarantee that after your select a student loan servicer that your student loan is transferred to another student loan servicer.
One role of your student loan servicer is to help you understand your available options with regard to your student loans. In addition to federal student loan consolidation, here are some other options:
- Student Loan Refinancing
- Income-Driven Repayment Plans
- Student Loan Forgiveness
Zack Friedman is a keynote speaker and Founder & CEO of Make Lemonade, a personal finance comparison site that helps you save money and live a better financial life.