Federal loans are held by the U.S. Department of Education, but a contractor handles your payments

When you borrow federal student loans, the money comes from the U.S. Department of Education. However, you do not send payments directly to the department. Instead, a loan servicer — a private company hired by the government — collects your payments, answers your questions, and manages the day-to-day details of your loan. The servicer is not the owner; it is the administrator.

This matters because the servicer is who you contact about payment plans, deferment, forbearance, or forgiveness programs. The Department of Education sets the rules, but the servicer is the one who processes your requests. If your servicer changes — which happens periodically — your loan itself does not move; only the company handling it does.

The federal government can also sell the right to service your loan to a different company without your permission. You will receive notice of the change, but you cannot prevent it. Your loan balance, interest rate, and terms stay the same; only the phone number and website change.

Key Takeaways

  • Federal student loans are owned by the U.S. Department of Education, but a private loan servicer collects your payments and manages your account.
  • Your loan servicer can change without your consent, and you will be notified by mail when it does.
  • Private student loans are owned by the bank or lender that issued them, and they do not have the same forgiveness or income-driven repayment options as federal loans.
  • Knowing who holds your debt determines which repayment plans and forgiveness programs are available to you.
  • You can find your federal loan servicer by logging into StudentAid.gov or calling the Federal Student Aid Information Center.

How to find out who services your federal loans

Log into StudentAid.gov using your FSA ID (Federal Student Aid ID). Your dashboard will show each loan you have, the loan type, the balance, and the name of your current servicer. This is the most direct way to see who is handling your account right now.

If you do not have online access or prefer to call, contact the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243). They can tell you which servicer holds each of your loans and provide contact information. You can also mail a request to the Department of Education, though this takes longer.

Write down your servicer's name and phone number. You will need it if you want to change your repayment plan, request a deferment, or explore forgiveness programs. Different servicers use slightly different systems, so having the correct contact information saves time.

Private student loans are held by the lender that issued them

Private student loans are owned by the bank, credit union, or online lender that loaned you the money. Unlike federal loans, there is no middleman servicer — you deal directly with the lender. Common private loan holders include Sallie Mae, Discover, Wells Fargo, and various credit unions.

Private loans do not have the same protections as federal loans. There is no income-driven repayment option, no automatic forbearance during hardship, and no forgiveness program. The terms depend entirely on what you agreed to when you borrowed. Interest rates are often higher and can be variable, meaning they change over time.

If you have private loans, check your loan documents or contact the lender directly to confirm the current holder. Some private loans have been sold from one company to another, so the original lender may no longer own your debt. Your monthly statement will show who to contact.

What happens when your loan is sold to a different servicer

The Department of Education periodically contracts with new servicers or ends contracts with existing ones. When this happens, your loan is transferred to a new servicer. You will receive written notice at least 15 days before the transfer takes effect, with the new servicer's contact information and instructions for setting up your account with them.

Your loan balance, interest rate, and repayment terms do not change. The new servicer inherits all the details of your existing loan. However, the new servicer may use a different website, phone number, or payment system. Some servicers are stricter about deadlines or more responsive to requests than others, so the experience can feel different even though the loan itself is the same.

If you are in the middle of a deferment request, forbearance application, or repayment plan change when the transfer happens, contact the new servicer immediately to confirm the status. Transfers sometimes cause delays in processing, and you want to make sure your request does not get lost.

Federal versus private: what the difference means for you

Federal loans come with built-in protections that private loans do not. If you face financial hardship, federal loans offer income-driven repayment plans that cap your payment at a percentage of your discretionary income. Federal loans also have deferment and forbearance options that pause or reduce payments temporarily. Some federal loans are may be able to access for forgiveness programs after a set number of years or under specific circumstances.

Private loans have none of these options. Your lender can refuse to work with you if you fall behind, and they can pursue collection actions or sue you. Interest continues to accrue during hardship, and there is no government safety net. Some private lenders offer temporary forbearance as a courtesy, but they are not required to.

This is why knowing whether your debt is federal or private matters. It determines what options are actually available to you when circumstances change. If you have both types of loans, you will need to manage them separately because the rules and resources are different.

Parent PLUS loans and who holds them

Parent PLUS loans are federal loans taken out by parents to pay for their child's education. The Department of Education owns them, just like other federal loans, and a servicer collects the payments. However, the parent is the borrower and is responsible for repayment — not the student.

Parent PLUS loans have fewer repayment options than other federal loans. The standard repayment plan is 10 years, and income-driven plans are available but work differently than they do for student loans. Parent PLUS loans cannot be forgiven through Public Service Loan Forgiveness or other standard forgiveness programs, though the parent can request a discharge under specific circumstances like the student's death or the parent's disability.

If you are a parent with a PLUS loan, you can find your servicer through StudentAid.gov just like a student borrower would. The same rules about servicer changes apply.

Frequently Asked Questions

Can I change who services my federal loan?

No. The Department of Education assigns your loan to a servicer, and you cannot choose which one. You can only change servicers when the government contracts with a new one and transfers your loan. You will be notified when this happens.

If my loan is sold to a new servicer, do I owe more money?

No. Your loan balance, interest rate, and terms remain exactly the same. Only the company collecting your payments changes. The new servicer inherits your loan as it exists, with no additional charges or changes to what you owe.

What if I cannot find out who holds my loan?

Call the Federal Student Aid Information Center at 1-800-433-3243 or visit StudentAid.gov and log in with your FSA ID. If you have private loans, check your loan documents or contact the bank or lender you originally borrowed from. They can tell you if the loan is still with them or has been sold.

Do I have to pay a private loan servicer if I cannot afford it?

Private lenders are not required to offer payment plans or hardship options. However, some do negotiate with borrowers in financial difficulty. Contact your lender directly to ask about options. If you cannot reach an agreement, the lender can pursue collection or legal action.

Can a federal loan servicer refuse to process my request?

A servicer must process valid requests for deferment, forbearance, and repayment plan changes. However, they may deny the request if you do not meet the requirements. If you believe a servicer is not processing your request correctly, you can file a complaint with the Consumer Financial Protection Bureau or contact your state's attorney general.