When Your Student Loan Is Sold

Has your lender sold your student loan or transferred it to a servicer? No problem. Lenders sell their student loans—and their car loans, home loans, and boat loans—all the time. However, as a borrower who must pay back a loan, you can save yourself a lot of confusion if you know these basic facts about lenders, secondary markets, servicers, and student loans:
• Why do lenders sell their loans?
For a variety of reasons, but usually to get cash in order to make more student loans. The loans are mainly sold to other lenders and organizations in a “secondary market” made up of state and private education organizations that specialize in buying and “servicing” student loans.
• What is servicing?
Some lenders and all secondary markets have contracts with student loan servicers, which are companies that take care of all the details—like collecting and processing payments, handling inquiries, and maintaining loan records—for them. Loan servicers “service” loans for many lenders and secondary markets at the same time.
• How will I know if my loan has been sold?
You’ll receive a letter from the lender who is selling your loan. When the loan is actually sold, the new owner or its servicer will send you a letter that explains why the loan was sold, who the new owner is, where to send your payments, and where to call if you have any questions. The letter will include a statement listing the loans they are servicing for you, the dates you took out the loans, the interest rate, the names of the loan programs, and the total amount you owe.
• What happens when my loan is sold or transferred?
You become indebted to the new owner of your loan—not your original lender. The new owner or its servicer may send you a new coupon book for your payments and may offer you some services that were not available from your original lender. But rest assured, the rate and terms of your student loan will not change.
Here are some tips to ensure that you’ll get along great with your new lender or servicer:
• Read all mail from the servicer.
• Call your servicer immediately if you are having difficulty paying back your loan. The servicer is there to help, and usually something can be worked out.
• Be sure to notify your servicer about changes in your name, address, telephone number, and student status. Since you’re likely to move around in the early years of repayment, make sure your servicer knows where you are so you won’t miss any important mail.
• Contact your servicer with questions about payments, deferments, and forbearances.
• Contact your original lender—not its servicer—to apply for a new student loan.
This tipsheet may contain material related to the Federal Title IV student aid program. While the College Board believes that the information contained
herein is accurate and factual, the tipsheet has not been reviewed or approved by the U.S. Department of Education. © 2007 The College Board. All rights
reserved. College Board and the acorn logo are registered trademarks of the College Board. All other products and services may be trademarks of their
respective owners. Visit the College Board on the Web: www.collegeboard.com. Permission is hereby granted to any nonprofit school to reproduce this
tipsheet for distribution to its students, but not for sale, provided that the copyright notice of the College Board appears on all reproduced materials.
• Read your first statement from the new owner carefully and make sure that the information is up to date. When a loan is sold, it can take up to 60 days for your payments to be forwarded from your original lender to the new owner or servicer.
• Include a return address whenever you send mail to the servicer.
• Always write your social security number and address on your check.

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