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If you borrowed a federal student loan to pay for higher education costs, you won’t make payments directly to the government. There are a number of loan servicers who work with the U.S. Department of Education to oversee loan repayment for federal student loans.

Understanding who your loan servicer is, and what they do is essential for the loan repayment process.

What Are Student Loan Servicers?

Student loan servicers are companies that take care of the disbursement, billing, and customer service aspects of your federal student loans. They can help you figure out things like which repayment plan you should be on and whether to consolidate your student loans.

Need deferment or forbearance? They can also help you set that up. Loan servicers are basically a one-stop shop for everything you need to know or changes you need to make on your federal student loans.

List of Major Student Loan Servicers & Companies

Here are some of the major student loan servicers:

EdFinancial Services (HESC)

Address: P.O. Box 36008, Knoxville, TN 37930-6008
Phone: 1 (855) 337-6884
Website: www.edfinancial.com

Located in Knoxville, Tennessee, EdFinancial Services has been providing loan servicing for over 30 years. They work with both federal and private student loans, as well as schools that need help with things like financial aid processing.

MOHELA

Address: 633 Spirit Drive, Chesterfield, MO 63005-1243
Phone: 1 (888) 866-4352
Website: www.mohela.com

MOHELA is a student loan servicer headquartered in St. Louis, Missouri with offices in Columbia, Missouri and Washington, DC. They have been around for over 40 years and focus primarily on federal student loans.

Nelnet

Address: P.O. Box 82561, Lincoln, NE 68501-2561
Phone: 1 (888) 486-4722
Website: www.nelnet.com

Nelnet is one of the biggest student loan servicers in the country. Headquartered in Lincoln, Nebraska, they service federal and private student loans under their financial services division. They also own Great Lakes Educational Loan Services, began servicing student loans from FedLoans, and are a for-profit company listed on the New York Stock Exchange.

Aidvantage

Address: For general correspondence, P.O. Box 300001, Greenville, TX 75403-3001
Phone: 1 (800) 722-1300
Website: https://aidvantage.com/

Aidvantage, a branch of Maximus Education, LLC, is servicing either Direct or FFEL federal loans for the U.S. Department of Education. Aidvantage took over the loans that were formerly administered by Navient, a student loan servicer who stopped working with the U.S. Department of Education in September 2021.

ECSI

Address: For assistance requests, P.O. Box 1289, Moon Township, PA 15108
Phone: 1 (888) 549-3274
Website: https://heartland.ecsi.net/

Founded in 1972, ECSI stands for Educational Computer Systems, Inc. In addition to working as a student loan servicer for federal student loans, they also provide support with tax document services, tuition payment plans, and refund management.

Default Resolution Group

Address: Correspondence can be sent to P.O. Box 5609, Greenville, TX 75403-5609
Phone: 1 (800) 621-3115
Website: https://myeddebt.ed.gov/

Part of the U.S. Department of Education, this organization provides information and assistance for borrowers who have federal student loans in default or have received a grant overpayment. Grants, such as a Federal Pell Grant, may need to be partially repaid in the event the student receives an overpayment.

​​Private Student Loans With SoFi

The loan servicer on a private student loan is typically the lender. Private loans can be helpful for students looking to fill funding gaps when federal aid and scholarships aren’t enough to pay for tuition. They don’t always offer the same benefits as federal student loans, like options for deferment or the ability to pursue Public Service Loan Forgiveness, so they are generally considered only if a student has closely reviewed all other options.

SoFi provides private student loans for undergraduate and graduate students, or their parents. These loans have no fees and borrowers have the option of four flexible repayment plans. When you borrow a SoFi student loan, SoFi is your loan servicer. Borrowers are able to make payments directly in the SoFi app or online and have access to 24/7 customer service.

💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

How to Find out Who Your Student Loan Servicer Is

You don’t get to pick your student loan servicer, since they’re assigned to you when your loan is disbursed. If you’re not sure who your loan servicer is, don’t worry. Finding your servicer is easy. You can look it up by visiting the Department of Education’s student aid website, which has all the information about your federal student loans and contact information for the loan servicers.

Additionally, in some cases, student loans may be transferred between servicers due to the company’s closure, the expiration of a government contract, and more. Should this happen, borrowers are supposed to be notified of the change.

Can You Change Your Student Loan Servicer?

While sometimes student loans can be transferred from one servicer to another, this usually doesn’t happen simply because a borrower requests it. The main way you can change servicers is if you refinance your student loans from federal loans to private student loans.

By refinancing, you can potentially cut interest costs over the life of the loan, if you’re able to qualify for a more competitive interest rate. Refinancing can also allow you to adjust the repayment term on the loan, though extending the loan’s repayment term may increase the interest costs over the life of the loan.

However, there are also some downsides. If you refinance your federal student loans with a private lender, you’ll no longer be eligible for income-based repayment plans, and you might lose other federal loan protections like the option for deferment or forbearance. This may be important if you are uncertain about your future income or you are struggling with your repayment.

The Takeaway

Student loan servicers are private companies that work with the U.S. Department of Education to administer federal student loans. They manage student loan payments, oversee deferment or forbearance applications, and provide assistance to borrowers with questions about their repayment plan or their student loans in general. Private student loans are generally managed by the lender.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

What is the most common student loan?

Federal student loans are the most common type of student loan borrowed to pay for higher education costs. Federal student loans include Direct Subsidized and Unsubsidized loans and PLUS Loans. Approximately 92% of student loans were federal as of July 2023.

Who are the main student loan servicers?

The U.S. Department of Education works with six student loan servicers who manage and administer all federal student loans. Private student loans are, for the most part, serviced by the lender who made the loan. In some cases, your loan servicer may change. If it does, you should receive a notice of the change.

What do loan servicers do?

Loan servicers are companies that manage the different facets of student loan repayment. They administer the loan, collect payments, can assist and can provide assistance to customers with questions related to their student loan repayment.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

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Although the Biden-Harris Administration’s plan for widespread student loan forgiveness was ultimately shot down by the Supreme Court, all is not lost for the millions of borrowers hoping to have their loans canceled.

For instance, the administration established a new income-driven repayment plan known as the Saving on a Valuable Education (SAVE) plan. This program replaces another IDR plan — Revised Pay As You Earn (REPAYE) — in an attempt to improve some of its shortcomings and provide greater relief to struggling borrowers. SAVE extends the repayment timeline to 20-25 years and forgives any remaining balance after that period.

That said, student loan forgiveness options may be more limited for borrowers with private loans, who owe an average of $54,921 each.

Student Loan Breaks for Many but Not All

The Biden administration and the U.S. Department of Education have forgiven a large amount student loan debt so far via targeted relief efforts. It canceled $9.5 billion in student loans in 2021, mainly for federal student loan borrowers who are public servants or graduates of now-defunct schools. The administration also canceled federal student loans for borrowers who were defrauded by their institutions and who have total and permanent disabilities.

In August 2022, President Joe Biden announced a larger initiative to forgive up to $20,000 in federal student loans for those who met certain income requirements. However, the Supreme Court deemed that the President didn’t have constitutional power to implement such a plan. Either way, private student loan borrowers were not included in any of the relief.

Recommended: A Guide to Private Student Loans

Can Private Student Loans Be Forgiven?

Do lenders forgive private student loans? Unfortunately, that almost never happens.

However, many do offer student loan deferment or forbearance options for borrowers facing financial hardship. Interest typically accrues during these periods, regardless of whether the borrower is making payments.

Read your loan contract or disclosure statement for your loan, which contains information about terms, rates, fees, and penalties. Here, you’ll find information related to any hardship programs offered by the lender. You can also reach out directly and ask about your options.

Whatever you do, don’t miss a payment. Contact your lender immediately if you’re facing a hardship that will prevent you from making payments on time and in full. After a default on a private student loan, which can happen quickly, private lenders may hire a collection agency or file a lawsuit.


💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

Private Student Loan Debt Relief Options

Don’t assume that if you’re having trouble making your private student loan payments you don’t have any recourse. Here are a few moves you can consider.

1. Refinance Your Private Student Loans

Refinancing your student loans can offer several benefits. If you have a good credit history and solid income, or a cosigner, you may be able to qualify for a lower interest rate, reducing your monthly payments and the total interest you pay over the life of the loan.

Or you may be able to lengthen the term of your loan and decrease your monthly payments (but elongating the repayment term will usually increase the total interest paid). Give this student loan refinancing calculator a try.
When you refinance, the lender will pay off your old loans and issue you a new loan with a new rate and terms and with one payment.

A few lenders will refinance both federal and private loans. You’ll also be given a choice of a fixed or variable rate.

Even if interest rates rise, variable rates often save money over the long term.

Do your homework:

•  Be sure you’re getting the lowest rate possible with terms that fit your short- and long-term needs.

•  Although student loan refinancing almost never comes with any closing costs, it’s a good idea to find out if there are any fees involved. Keep in mind that you can refinance more than once.

•  If you plan to refinance any federal student loans, know that doing so will permanently forfeit all federal benefits and protections, including income-driven repayment plans, federal deferment and forbearance options, and forgiveness programs such as Public Service Loan Forgiveness (PSLF).

•  Consider lenders that initially do a soft credit pull before you actually apply with them to refinance your student loan. That way, shopping for interest rates will not affect your credit.

Recommended: Soft vs Hard Credit Inquiry: What You Need to Know

2. Talk to Your Lender

Talk to your lender about your options to repay your student debt. You aren’t the first (and you won’t be the last) to ask for help, and many private lenders offer some type of loan modification for borrowers who are financially struggling.

You may be able to negotiate a lower interest rate or a lower payment over a longer term, or set up a period during which you can make interest-only payments.

Be ready to answer questions about why you’ve fallen behind, what other debts you’re paying, and about your income prospects.

Always communicate with your lender to avoid student loan forgiveness scams. Some private companies that falsely offer debt relief may try to ask you to pay monthly costs or upfront fees, ask you for your identification, or promise immediate loan forgiveness. If you think you’re the victim of suspicious activity, contact the Federal Trade Commission.

3. Consider a Payment Pause

Some private lenders offer deferment or forbearance, which will allow you to postpone payments.

•  Deferment is sometimes available to borrowers who are planning to go back to school or who are entering military service.

•  Forbearance is typically available for those who have had an unexpected hardship that makes repayment difficult, such as an illness or a job loss.

Interest will still accrue during these private loan payment breaks.

As with federal loans, your employer may assist you with your private loans, especially if your skills are in demand. Also, many industries and professional associations offer student loan repayment assistance for firefighters, teachers, lawyers, and health care workers.

The Takeaway

Private student loan forgiveness is rare and has not been included in any sweeping moves to cancel student loan debt or provide relief. Borrowers of private student loans may be able to refinance and get a better rate or work with their lender if they’re struggling.

SoFi refinances both federal and private student loans. There is no cost or prepayment penalty. Deferment and forbearance plans are available.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

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A collective investment trust (CIT), also commonly called a commingled trust or collective trust fund, is a pooled investment fund that’s similar to a traditional mutual fund — but a CIT falls under a different regulatory path and may offer lower fees and tax advantages.

Similar to a mutual fund, a collective investment trust generally consists of assets pooled from investors — but in the case of a CIT the funds come only from qualified, employer-sponsored retirement plans, such as 401(k)s, pension plans, and government plans. They are typically not available to retail investors directly.

How a Collective Income Trust Works

CITs have grown in popularity over the years, likely due to their lower cost structures and the potential tax advantages they offer.

The goal for a collective income trust is to pool fund assets together into a single account (called a “master trust account”) and manage the investment funds in a highly diversified, low-cost manner. Although the trust is typically managed by a bank or trust company, the trustee can opt to hire an investment management firm in a sub-advisory capacity to manage the income portfolios.

The CIT investment process is fairly standard. Structurally, the bank or trust company will collect funds from various retirement-oriented investment accounts and commingle them into a single fund (i.e., the CIT), and thus become the trust’s “owner.” CIT investor participants don’t own any direct assets in the trust — instead they hold a participatory interest in the CIT fund assets (similar to the way investors hold mutual fund shares).

The trust, meanwhile, is free to invest in a wide variety of investment vehicles, including stocks, bonds, mutual funds, currencies, derivatives, or possibly alternative investments like commodities or precious metals. Strategically, the trust manager’s mandate is two-fold:

1.    Collect investment assets from participating investment plans and commingle them into a single fund.

2.    Manage the single fund like any mutual fund manager does — with a specific investment strategy, and goals and track the fund’s performance to ensure the fund is meeting its investment goals.

💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.

Collective Income Trusts vs Mutual Funds

CITs are often compared to mutual funds because in both cases, investors’ assets are pooled and invested in a diversified portfolio of securities. Other than that, these two investment vehicles have some stark differences.

•   Individuals can invest in a mutual fund through an online brokerage or a personal retirement account like an IRA, but investors can only access CITs through an employer-sponsored retirement plan, pension plan, or insurance plan.

•   A collective investment trust is not regulated by the SEC but overseen by the Office of the Comptroller of the Currency (OCC) for national banks, or state banking authorities for state banks and the Department of Labor (DOL). As a result, a CIT is typically less transparent about its holdings than a mutual fund.

•   Unlike a mutual fund, a collective income trust is not required to register under bylaws created in the Investment Company Act of 1940. Thus, because a collective investment trust isn’t subject to the same operational, disclosure, and reporting rules of federal and state securities laws, the cost to invest in a CIT is generally lower than a mutual fund.

•   Whereas mutual fund fees are set by the investment firm as an expense ratio and are non-negotiable, some CIT costs can be negotiated.

•   CIT earnings are considered a tax exempt investment, not merely tax deferred as mutual fund earnings within an employer-sponsored plan might be.

•   A collective investment trust is set up as a trust and offered by a bank, trust company or other financial institution, whereas a mutual fund is offered by an asset management company.

A History of Collective Investment Trusts

Collective income trusts have been around for nearly a century. The first fund rolled out in 1927 on a limited basis. When the stock market crashed in 1929, CITs fell under additional scrutiny owing to the pooled nature of these funds, their lack of transparency, and the timing of the crash. Subsequently, CITs were significantly restricted by the government, which mandated that CITs could only be offered to trust company clients and through employee-sponsored retirement plans.

About 20 years ago, though, CITs began providing daily valuation and standardized transaction processing — in other words they began to operate more like mutual funds — which greatly increased adoption by defined contribution plans.

The real turning point came in 2006, when the Pension Protection Act provided for the use of Qualified Default Investment Alternatives (QDIA) for certain 401(k) plan investors. Target date funds, many of which include CITs, were designated as QDIAs, thus giving more investors access to CITs (although banks and trusts still couldn’t, and can’t, offer CITs directly to retail investors).

Since then, the cost efficiency of collective investment trusts has drawn the attention of many fund managers, and the use of CITs over traditional mutual funds in target-date fund series has grown.

Collective Income Trusts: Things to Know

By design, collective income trusts offer several unique features — and potential drawbacks — for qualified retirement plan providers and their investors:

CITs as fiduciaries

CITs must abide by the rules and regulations laid out in the Employee Retirement Income Security Act of 1974 (ERISA). That means CITs must meet minimum standards of conduct, like requiring CIT providers to give investors critical information such as plan features and funding. As such, a CIT trustee is held to ERISA fiduciary standards for the ERISA plan assets invested in CITs.

CIT’s long-term focus

Unlike a mutual fund, a CIT doesn’t need to distribute 90% of its taxable income every year (mutual funds are regulated investment companies and are required to provide annual taxable income distributions to investors.) That allows collective income trusts to hold investment funds in the trust, allowing those investments to grow in value over time.

No FDIC coverage

Unlike bank deposits, investor deposits in a collective income trust are not insured by the Federal Deposit Insurance Corporation (FDIC). While investments in a 401(k) are not FDIC-insured either, if deposits (e.g. savings, money markets, CDs) are covered by an FDIC-insured institution, then the deposits are as well.

CITs and rollovers

Collective income trusts don’t offer the same investment portability of mutual funds. Trust customers have to liquidate their positions in the CIT into a cash account before they can roll over funds adding an extra step to the account rollover process. Thus, CIT investors should work closely with their plan sponsors when rolling plan funds over to another retirement plan.

The Takeaway

Although a collective investment trust is often compared to a mutual fund, the only two similarities of these vehicles is that they are both pooled investment portfolios, with funds from many investors commingled — and both are used in retirement plans. For now, though, a CIT is only available to investors through certain qualified plans.

Collective income trusts are becoming more common in the employment retirement plan universe, as more target date funds opt to include CITs. CITs are also quite different from mutual funds. They follow a different regulatory flow and are not overseen by the SEC. With more room to operate in a regulatory sense than traditional mutual funds, CITs can offer clients a unique long-term investment option tailored to their investment management needs, and in a cost-effective manner — all managed in a single investment account.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

FAQ

How is a collective investment trust valued?

A collective investment trust (CIT) is usually valued daily, and its valuation is a summation of the assets that it holds, like many other investment vehicles.

How do you start a CIT?

Starting a CIT is an intricate process, and is by no means simple. It would involve putting together several governing documents, assuring that the CIT is operating within the confines of state and federal laws, working with regulators, and then pooling investments — no easy feat.

Are CITs recommended to diversify a portfolio?

CITs may be recommended by a financial professional as a way to diversify an investment portfolio, as they comprise many different individual investments under one fund or trust.

Photo credit: iStock/izusek

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