Update September 2025: The Department of Education announced that it will transfer federal student loan accounts away from MOHELA to other servicers by the end of 2025. The change comes after widespread complaints about MOHELA’s customer service, billing errors, and handling of PSLF applications. Borrowers currently with MOHELA will receive official notice before their accounts are moved. While the process should be automatic, it’s smart to take precautions to avoid missed payments or errors (see the steps below).
A common headache of life with student loans is dealing with a loan servicer transfer or change.
For most borrowers, the best-case scenario is a minor inconvenience. But if things go poorly, missed payments or servicing mistakes can cause lasting trouble and some borrowers may even fall for a scam.
As someone who has dealt with this issue before, I’ve put together the following guide for borrowers facing a student loan servicer change.
Why Do Student Loan Servicer Changes Happen?
Loan servicer changes happen for several reasons:
- Federal contracts expire and get reassigned to new companies.
- Private lenders sell or transfer their student loan portfolios.
- The Department of Education restructures its servicing system.
In 2024, the federal government announced it would limit contracts to a smaller number of loan servicers. As a result, millions of federal borrowers are seeing student loan transfers, including the major shift away from MOHELA in 2025.
Making Sure the Student Loan Servicer Change is Not a Scam
Borrowers are smart to be on the lookout for student loan-related scams.
Because the change in student loan companies is a confusing yet common practice, student loan scammers may try to take advantage of unsuspecting borrowers.
Fortunately, borrowers have several tools available to make sure that the transfer is legitimate.
- Call the original student loan company. If your debt will be sold to another lender or serviced by a different company, your current lender should know all about it.
- Find external verification. These transfers often happen on a large scale, making it a newsworthy event.
- Check the federal database. The Department of Education keeps detailed records on federal student loans. This information includes the company assigned to service the loans. If you receive notice that your federal loans are being serviced by someone new, check the federal database to see if it is true.
It’s awful that borrowers have to constantly be on the lookout for scams, but in this instance, verifying legitimacy takes very little time.
Terms and Conditions Stay the Same
When your loan servicer changes:
- Your contract, repayment plan, and interest rate remain the same.
- Monthly payments should not change just because your servicer does.
- The only exception is if you have a variable-rate loan, and the transfer happens at the same time as an interest rate adjustment.
What to Do Before and During a Servicer Transfer
If you get word that your student loan is on the move, you should jump into action.
- Download copies of all billing statements. If the move happens and the balance looks off, you may need proof of your prior payments.
- Update contact information. If your address or email has changed, you will want to update this info. Missing out on essential communications could lead to missed payments.
- Turn off automated payments. If your bank automatically makes a payment each month, you don’t want that payment to go to the old student loan company. Likewise, your old lender should stop pulling auto-debits, but the smart move is to turn it off so that no mistakes happen.
- Save copies of all lender emails and communications. Once you are with a new student loan company, it will be hard to access old records and conversations. If you save a copy, it might come in handy in the future.
- Watch for welcome email or letter from your new servicer and set up a new online account right away.
- Reinstate autopay or re-enter your payment method with the new servicer to ensure continuous payments.
- Monitor your credit report to make sure the transfer was reported correctly.
Most transfers take a few weeks, but it can take up to 30 business days for payment history to fully transfer.
If you’re pursuing PSLF, it’s especially important to confirm that your qualifying payments carried over correctly after the transfer. Our guide on tracking your PSLF forgiveness status walks you through how to verify your payment count and catch discrepancies early
Sherpa Tip: Noticed errors after a servicer transfer? Don’t panic. Mistakes are common, but they can be fixed. Read our guide on correcting errors on your student loan account.
What to Do If Problems Occur
Even with precautions, servicer errors happen. If you run into issues:
- Contact both your old and new servicers to resolve missing payments or incorrect balances.
- If unresolved, file a complaint with the U.S. Department of Education’s Office of Federal Student Aid.
- Keep meticulous records of all communications and payment confirmations.
Sherpa Tip: If your servicer won’t fix the problem, you still have options. See our guide: Help! My Federal Loan Servicer Won’t Do Its Job for steps you can take when servicers are uncooperative.
Can I Change My Student Loan Servicer?
Unfortunately, borrowers usually have little say in whether or not their student loan company changes.
Private lenders routinely sell student debt to other lenders, and the federal government routinely contracts with new servicers. Lenders carefully draft student loan contracts to ensure that they have the right to make these changes.
However, there is one way that borrowers can take control of the situation. If they choose to refinance their student loans, they can essentially pick their next lender and get a lower interest rate or better repayment terms.
Refinancing federal loans with a private lender is a significant risk because borrowers give up the generous federal perks. However, refinancing a private loan is usually a good idea as long as the borrower can find a better interest rate and repayment terms.
Refinancing Companies Offering Low Rates (Updated)
At present, the following refinance companies offer the lowest interest rates:
| Rank | Lender | Lowest Rate | Sherpa Review |
|---|---|---|---|
| 1 |  | 4.39% | LendKey Review |
| T-2 |  | 4.74% | ELFI Review |
| T-2 |  | 4.74%* | Splash Financial Review |
FAQs on Student Loan Servicer Changes
No, the transfer only changes the loan servicer. Your loan terms, interest rates, and repayment options remain the same.
You should receive notification via email and/or postal mail about the transfer. After the transfer, you will get info about your new servicer and how to set up your account.
Account access may be delayed while loans transition to a new platform. Continue making payments on time, keep detailed records, and try calling customer service if access issues persist.
Keep proof of payment, contact your new servicer immediately, and notify the Department of Education if necessary to resolve account discrepancies.
Generally, loan servicer assignments are controlled by the Department of Education, not borrowers. There is no direct way to choose a different servicer.
Patience is needed during transitions as customer service demand is high. Use online resources, keep documentation of your attempts to contact, and file complaints through official channels if service is inadequate.
About the Author
Pedro Gomez is the new Student Loan Sherpa and a Certified Financial Planner™ with over a decade of experience helping clients navigate complex financial decisions. He is the founder of Global Financial Plan, where he writes about international living, geoarbitrage, and strategies for retiring young, and also leads Brickell Financial Group, a registered investment advisory firm focused on accelerating financial freedom.
Pedro is the architect behind the “12 Levels of Financial Freedom” framework and blends student loan strategy with long-term planning, tax efficiency, and investing. His work is especially geared toward upwardly mobile professionals, entrepreneurs, and those looking to design a life beyond the default path.
Pedro is available for strategy sessions and press inquiries.
