What to Do When Your Federal Student Loan Servicer Changes Without Notice

Unexpected Student Loan Servicer Changes: What Borrowers Need to Know

Many federal student loan borrowers have recently experienced unexpected changes in their loan servicer, sometimes without clear prior notification. Annie Nova, a graduate school alumna, discovered in mid-August that her loans had been transferred from Nelnet to Central Research Inc. (CRI), a servicer she had not heard of before. The transfer notice arrived via email with minimal advance warning, and the official notification was buried in her Nelnet account inbox, which she had not checked.

Administrative Forbearance: A Common but Costly Transition Status

Upon logging into her new CRI account, Nova found her loans placed in administrative forbearance—a status she had not requested. Experts explain that this is a standard practice during servicer transitions to prevent borrowers from being marked delinquent while payments are processed between old and new servicers. However, interest continues to accrue during this period, potentially increasing the total loan balance.

Mark Kantrowitz, a higher education expert, notes that although payments are paused, borrowers should be cautious about making payments during the transfer. Payments sent to the old servicer may not be accepted, while the new servicer might not yet be fully prepared to receive them. The recommended approach is to set aside the payment amount and resume payments once the new account is fully operational.

Importance of Maintaining Accurate Records

Borrowers should proactively save and document key loan information such as balances, interest rates, payment status, and history from both their previous and new servicer accounts. Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program, emphasizes that while loan details should remain consistent through the transfer, administrative errors can occur. Keeping comprehensive records enables borrowers to identify and dispute discrepancies effectively.

Verifying Account Details and Autopay Enrollment

After a servicer change, borrowers must verify that their personal information, loan details, and payment schedules are accurate with the new servicer. Additionally, if they were enrolled in automatic payments—which often provide a small interest rate reduction—they should confirm or re-enroll to maintain these benefits.

Resources and Next Steps

The U.S. Department of Education contracts multiple companies to service its $1.6 trillion federal student loan portfolio, including CRI, Nelnet, Mohela, and EdFinancial. Borrowers can find contact information for their servicers on StudentAid.gov. Regularly monitoring accounts, especially during servicer transitions, is crucial to ensure accuracy and avoid missed payments or credit issues.