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Ranked: The Best Federal Student Loan Servicers – Student Loan Planner

· Best federal student loan servicers — ranked · 8. Aidvantage · 7. FedLoan Servicing (PHEAA) · 6. MOHELA · 5. Nelnet · 4. HESC / EdFinancial Services
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Unfortunately, when it comes to federal student loan servicers, you can’t “have it your way.” The U.S. Department of Education chooses your student loan servicer when you first take out your federal student loan. You make your monthly payment to your loan servicer and can ask them about your repayment options.

In recent years, nearly 90% of all federal loans were assigned to one of the “Big Four” student loan servicers. But Navient is no longer a federal loan servicer, and FedLoan is on its way out the door. So, student loan accounts are in a significant transition period.

As the servicers change, you could be assigned to one of the new or remaining loan servicers. This includes Great Lakes, HESC/EdFinancial, MOHELA, Aidvantage, Nelnet, OSLA or ECSI.

To call one of these servicers the “best” would be kind of like trying to pick the best strain of the flu to come down with. But here’s how we decided which servicers were the “best of the worst.”

Best federal student loan servicer ranking methodology

To come up with our list, we began by downloading data from all the student loan servicer complaints that the Consumer Financial Protection Bureau (CFPB) received from May 1, 2018, to May 1, 2019.

Next, we took data from the Department of Education’s Federal Student Aid website to determine the number of recipients for each servicer.

Finally, we divided each servicer’s number of complaints by the number of recipients and multiplied the result by one million. This gave us the number of federal student loan complaints per one million loan recipients.

Best federal student loan servicers — ranked

Below are federal loan servicers ranked from worst to… least-worst.

8. Aidvantage

Aidvantage (Navient’s replacement) just began servicing loans in December 2021. However, it’s a subsidiary of Maximus Education, which manages defaulted student loans — and doesn’t do a great job of it. So, the bar isn’t set very high.

In the first half of 2022, Aidvantage isn’t proving to be a great replacement. Currently, Aidvantage is getting a lot of complaints from borrowers and getting not-so-great information regarding their loans.

7. FedLoan Servicing (PHEAA)

FedLoan Servicing supports various borrowers during student loan repayment, including those who are under the Public Service Loan Forgiveness program (PSLF). However, MOHELA is taking over most of FedLoan’s accounts.

Related: What to Do If Your Federal Loan Servicer Changes

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When you look at customer complaints, FedLoan Servicing really separates itself from everyone else — in a bad way.

Download the Best Student Loan Forgiveness Calculator

While FedLoan fared 2.5 times better than former loan servicer Navient, the CFPB still received 251 complaints per million customers for FedLoan. This was over twice as much as many complaints as all the other servicers on the list.

In all, the CFPB received 1,829 complaints from FedLoan Servicing customers from May 1, 2018, to May 1, 2019.

Student Loan Planner® has written a great deal about issues borrowers have with FedLoan, including an article recently that addressed complaints from readers who were being wrongly kicked off Income-Based Repayment (IBR).

6. MOHELA

The Higher Education Loan Authority of the State of Missouri (MOHELA) is the first nonprofit federal student loan servicer to make it onto our list, narrowly squeaking ahead of Nelnet. Here’s why.

There tends to be a naturally positive correlation between the number of loans a company services and the number of complaints it gets. And this isn’t just the sheer number of complaints (which would obviously be expected), but the percentage of customers who make complaints as well.

In other words, smaller loan servicers not only have fewer total complaints but also tend to have fewer complaints per customer. This is probably because servicers who have fewer customers are able to give the ones they have better customer service and attention to deal with their current loan.

Smaller doesn’t always mean better

Despite the fact that MOHELA has far fewer customers than Nelnet, they ended up receiving only 10 fewer complaints per million customers. That’s not good.

And the numbers could actually be even worse. Since the federal government doesn’t tell us exactly how many recipients each nonprofit servicer has, we had to do our best to estimate.

To do that, we took the three million customers serviced by nonprofits and divided it by five (the total number of nonprofit servicers) to give us an estimated customer base of 600,000 per nonprofit servicer. But this is only an estimate. If MOHELA actually has fewer customers, then its ratio of customers to complaints could be even worse.

If MOHELA is your student loan servicer, you may want to check out our breakdown of the biggest headaches MOHELA customers deal with.

5. Nelnet

If you were assigned Nelnet as your student loan servicer, you could look at it one of two ways:

  • You could be bummed that you’ve been assigned one of the “Big Four.”
  • You could be thankful you weren’t assigned FedLoan or Navient while tackling your loan balance.

Although it has had its own fair share of complaints, Nelnet customers tend to be much happier on the whole.

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In total, Nelnet received 120 complaints per million customers. Not terrible for a company that services a nice chunk of all student loan debt.

That’s still a significant number of complaints, though. If you’re wondering what Nelnet customers tend to feel frustrated about, you may want to read the most common complaints about Nelnet.

4. HESC / EdFinancial Services

The Higher Education Services Corporation (HESC) — also known as EdFinancial Services — ended up finishing in a dead heat with Granite State in customer complaints. Both had 13 complaints filed with the CFPB. That’s only about 22 complaints per million customers.

While that sounds pretty good, you may still run into issues with HESC if you’re assigned to it as your servicer. In Student Loan Planner®’s own survey from the summer of 2018, only two respondents had their loans with HESC.

Both responses were negative.

One person said “no” when asked if HESC resolve their issue, and the other said “somewhat.”

When asked why they had a bad experience with HESC, one person said HESC has “uninformed individuals on the calling end.” The other said HESC has “no empathy” and is “short with clients.”

Ouch. Another reminder of why this list should be considered “best of the worst.”

3. OSLA

The Oklahoma Student Loan Authority (OSLA) is a servicer that has been around since the 1970s. They seem to know what they’re doing — only 11 OSLA customers filed complaints with the CFPB.

Again, your chance of having OSLA as your servicer (or any nonprofit servicer for that matter) is small. But if you are assigned to OSLA, consider yourself very lucky.

2. ECSI

ECSI is one of the lesser-known loan servicers that you may not have heard of. But they’re on the list of current servicers. When it comes to quality, there aren’t many CFPB complaints (about 100+). That may be due to servicing fewer borrowers.

1. Great Lakes

You might not have expected one of the big servicers to rank as the best federal student loan servicer. But Great Lakes Educational Loan Services has, for years, been known for the great way it takes care of its customers.

Read more: Opendoor Reviews: Ratings, How it Works, and FAQs

When it comes to CFPB complaints, Great Lakes received 229. That might not sound great on the surface. But keep in mind that Great Lakes has over 6 million student loan borrowers it serves.

Taking that into account, Great Lakes has a complaint rate of about 36 complaints per one million customers. That’s over three times less than Nelnet, seven times less than FedLoan Servicing and 18 times less than former loan servicer Navient!

Even in Student Loan Planner®’s own survey, several of our respondents had good things to say about Great Lakes.

It was a bit concerning when the news broke that Great Lakes was bought out by Nelnet. But it continues to operate independently as Great Lakes hasn’t changed its policies or customer service.

Former servicers

FedLoan is on its way out but is still on the list and Navient is no longer a current federal loan servicer based on the Federal Student Aid website.

As changes continue, check back to see which loan servicers are still working with federal loan borrowers and which ones have been phased out.

What can you do if your servicer is among the worst of the worst?

If you’ve been assigned one of the most hated federal loan servicers, you may be wondering if you can switch to one of the better servicing companies.

Unfortunately, the short answer is no. The Department of Education doesn’t let borrowers switch student loan servicers. There are only two ways that you can choose a new servicer than the one you’ve been assigned.

Direct Consolidation Loan

The first way is to consolidate your federal student loans through a Direct Loan consolidation. In this situation, the Federal Student Aid office will allow you to choose who you’d like to be your new loan servicer from a list.

Student loan refinance

The other option is to refinance your federal student loans. With student loan refinancing, you can choose whichever private student loan lender you want. You’d hopefully be able to cut your interest rate and student loan payments, as well.

However, refinancing federal student loans can be a dangerous move. You’ll lose all eligibility for federal benefits such as income-driven repayment plans and the ability to pursue PSLF or other student loan forgiveness programs. You may also miss out on deferment and forbearance options. If interested in refinancing, checking your credit report and score can help you see if you’re in good shape to qualify.

To get a full list of current student loan servicers and contact information such as phone number, you can check out StudentAid.gov.

To find out if a student loan refinance with a private lender would be right for your situation or if you need help tackling a large loan amount, consider having a discussion with one of Student Loan Planner®’s consultants.

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