While I was working on paying off my student loans, I checked my account balances weekly. One day, I logged into my account and the $10,000 I had in outstanding loans had disappeared.
At first, I was elated. Had some generous benefactor swooped in to pay off my debt? Then I realized I couldn’t be nearly that lucky — so I tried to figure out what happened.
Many people, including a financial professional, told me not to look a gift horse in the mouth and ask too many questions. But I didn’t think loan servicers were likely to have forgotten about my debt.
Tracking Down My Loans
I tried emailing my loan servicer to find out what happened, but didn’t get a response for a few weeks. I was afraid my loan payments would become due and I wouldn’t know where to make payments, so I decided to check my credit report to see if I could find my loan. (You can view two of your credit scores for free on Credit.com.)
Sure enough, my credit report showed my loan had been moved to a new loan servicer. When I reached out to the issuing bureau, they said my old lender had mailed me a letter as notice of the change, but I never received a letter.
It’s possible they had an old address on file, or I accidentally tossed it in the trash, but I’m glad I pursued it. If I hadn’t continued digging, I never would have found out and could have defaulted on my debt.
What Happens When Your Student Loan Debt Is Sold
My situation is not unique. Federal and private student loans can be sold to other lenders at any time. There’s a market of organizations that specialize in buying and servicing student loans.
When your loan is sold to a new lender, you’re indebted to the new owner of the loan. You have no more contact with the old one. While the new servicer might offer some new benefits, the basics of your loan — such as the interest rate or repayment term — will not change.
The original lender will send you a letter notifying you of the upcoming switch. Then, you’ll get a second letter from the new lender that explains why your loan was sold, who your new loan servicer is and how to make payments.
How to Protect Yourself
Because lenders can sell your loans whenever they want, it’s important to have safeguards in place. You don’t want to miss a notification and end up falling behind on your payments. Here’s what you can do to protect yourself:
● Update your contact information. If, like me, you’ve moved around, it’s important to make sure your lenders have your most recent contact information. Log in regularly and check to see they have the right mailing address and phone number.
● Read all mail. Read every piece of mail that comes from your lender. Don’t just assume it’s a monthly statement and toss it. It could be an important notification.
● Check the notification for accuracy. If you receive a notice that your loan is sold, make sure the balance and terms of your loan are accurate.
● Contact your lender with any problems. If you can’t find your loan or make payments, call your lender’s customer service line right away.
● Track your loans with the National Student Loan Data System (NSLDS). The NSLDS is a database that tracks your federal loans. It will list which loans are under your name and the loan servicer for each one.
● Check your credit report. If you aren’t sure if your private loan has been sold, you can find out by checking your credit report for free at AnnualCreditReport.com. It will list all your current loans and who owns each debt. Once you have the name of the lender, you can contact them to get your login information and start making payments.
By keeping your information up to date and checking your account regularly, you can prevent any confusion when managing your loans.
What to Do If You Hate Your New Loan Servicer
In my case, my new loan servicer was an improvement over the old one. Their online platform was easier to use and their customer service department was more responsive.
Some people don’t have the same experience. The Consumer Financial Protection Bureau reported there are thousands of calls each year from consumers about their student loan servicers.
If you have problems with your new loan servicer, such as delays in getting a response for an issue you reported, here’s what you can do:
● Contact the student loan ombudsman. If you can’t get your problems fixed, you can contact the student loan ombudsman. An ombudsman is a neutral third party that will work with you and your lender to identify a solution.
● Refinance your loans. If you’re simply looking for more features or want to reduce your interest rate, refinancing your student loans might be a smart approach. If you refinance, you’ll work with a private lender to take out a new loan for the amount of your old one. You can get a different repayment term, monthly payment and interest rate.
Managing Your Loans
The student loan system can be incredibly complex. Trying to navigate it can be difficult, especially since your loans can be sold to a new lender at any time.
You can protect yourself by being proactive and monitoring your credit report. If you hate your loan servicer, know that you’re not stuck with them. You can identify a resolution or get a whole new servicer who offers more favorable repayment terms.
For more information on shopping for a new loan, here’s what to do if you hate your loan servicer.