What Is The Difference Between A Lender And A Loan Servicer

Student loans, Student Loans 101

Whenever the topic of student loans is mentioned, lenders and servicers will come up. Without proper pedagogy, information technology'south easy to get confused about what lenders and servicers are and how you lot should engage with each. If that's you, don't worry! You're not alone. Our recent survey showed most half of educatee loan borrowers don't know who their loan servicer is.

Here's a quick primer on the roles of servicers and lenders and what they hateful to you.

Servicers

Loan servicers do non originate student loans or set the terms for them. They are, nevertheless, responsible for the management and repayment of student loans. If you have multiple loans, you lot may have more than 1 servicer.

Contact your servicer if you lot take questions virtually your educatee loans, want to modify your repayment plan, or have trouble making a payment. Your servicer volition too make contact with you on a regular ground. You probably already get communication from your servicer most accrued interest on your loans or repayment planning.

You lot don't get to choose who your servicer is. A servicer is assigned to yous when the money from the lender is disbursed. Dissimilar the lender, your servicer can change. Your servicer probably will alter at least once during your repayment menstruation.

Even though your student loan servicer is responsible for collecting payments, information technology is your ally. Servicers want you to successfully pay back your student loans and stay out of default. Piece of work with them to set up a repayment programme that works for you.

If you don't know who your servicer is, utilize your iontuition™ account or phone call one of our loan counselors. They'll be able to connect y'all to your servicer if you lot accept questions or need to make new arrangements on your student loan.

Lender

The lender lends the money for student loans. With many federal student loans, the federal authorities is the lender. When y'all receive a pupil loan, the government disburses the money. With private educatee loans, the lender is a bank or some other fiscal institution.

Yous take a choice in what lender you apply. Although colleges may take lenders they prefer to work with, the final decision is yours. The schoolhouse is required to certify all student loans, no matter who the lender is. Practice your research prior to choosing a lender. Federal loans typically have lower interest rates than private loans and you volition have more than flexible repayment options subsequently you graduate.

Unlike your servicer, yous may never communicate with your lender. In many cases, your school's fiscal aid role is the intermediary betwixt lenders and borrowers.

Student loans can be confusing. Just remember, lenders lend the money, servicers practise client service. Your iontuition business relationship makes it easy to see who services your loans, set up student loan payment reminders, and keep upward to date on other important details of your loan.

Tom Wray

Tom Wray is all about the research, getting it right, and making it relevant. He's got solid journalistic experience in all forms of content delivery – and he's got his keyboard humming with what'south upwards and important for students, college admins, parents, employers and news junkies.