Back in 2010 as part of the Healthcare legislation, a small part of it actually dealt with federal student loans. At the time, there were two federal student loan programs that were very similar: Direct Loans and FFELP loans. FFELP loans were federal student loans that were serviced by a bank or a student loan company, both of which received federal subsidies to participate in the program. The Healthcare legislation ended the FFELP loans, which meant the only federal student loans of this type could be Direct Loans.
The way the Direct Loan program works is you complete a Master Promissory Note (MPN) that says ‘Direct Loan’ on it. But once you have your loan originated and disbursed, your correspondence probably won’t have ‘Direct Loan’ on it. Instead, it will have other names on it. The Direct Loan program will transfer your loan to a student loan company that it selects to handle your loan needs. Your contact for information on your loan will become the company assigned to your loan. Who will it be? It’s not up to the student or the school. The Direct Loan program picks it out for the student.
When the switch over in 2010 began, there were just a handful of servicers, but the number has grown to meet demand. The Dept of Ed picks who these servicers are, and these servicers must continue to meet the expectations of the Dept of Ed in order to continue to be a servicer.
So, who are these companies that you may be working with? Below is the list of servicers:
- Aspire Resources, Inc.
- Direct Loan Servicing Center
- EDGEucation Loans
- Educational Services of America, Inc. (Edsouth Services)
- FedLoan Servicing (PHEAA)
- Granite State
- Great Lakes
- KSA Servicing
- Missouri Higher Education Loan Authority (MOHELA)
- National Education Loan Network (Nelnet)
- OSLA Servicing (OSLA)
- Student Loan Marketing Association (SLMA or Sallie Mae)
- VSAC Federal Loans