Federal Loan Servicing
Up until 2010, it was not unusual for students to borrow a combination of Federal Family Education Loans (FFELP) and Direct Loans, and repaying federal loans to different servicers. However, the U.S. Department of Education has been working on an initiative to position each borrower to have one federal loan servicer for all of his or her federally-owned loans.
Through this initiative, a student or parent borrower who has Direct Loans assigned to the Direct Loan Servicing Center (ACS) and Direct Loans and/or FFELP Loans assigned to one of the four other loan servicers will have their Direct Loans transferred to the other servicer.
The U.S. Department of Education has assigned all federal loans to the servicers listed on its website.
In some cases, one transfer will result in all of a borrower's federally-owned loans being serviced by one federal loan servicer. In a very small number of cases, the borrower may still have more than one servicer. When that occurs, the Department of Education will continue their transfer work until all of the borrower's federally-owned loans are serviced by one servicer. These loan transfers are ongoing.
When the Department of Education transfers a student or parent borrower's Direct Loans from the Direct Loan Servicing Center (ACS) to one of the four other federal loan servicers, the new servicer will correspond with the borrower after the transfer occurs. In this correspondence to the borrower, the new servicer will explain that the borrower's Direct Loans have been transferred and that the servicer will service the loans going forward. The correspondence will also include a toll-free phone number and website information for the servicer.
In addition to the student or parent Direct Loan borrower receiving correspondence from the new federal loan servicer, the new servicer will be identified as the servicer of the borrower's federally-owned loans in the National Student Loan Data System (NSLDS). We recommend that students and/or parents review their borrowing history and servicer information in NSLDS. NSLDS is a helpful resource in federal student loan management, as students can view a summary of all of their federal student loans, as well as the contact information for their loan servicers.