What If My Student Loan Is Sold Because My Lender Is Broke?

Why Do Lenders Sell Their Loans?

Lenders sell their loans for variety of reasons, but usually to get cash in order to make more student loans. The loans are mainly sold to other lenders and organizations in a “secondary market” made up of state and private organizations that specialize in buying and servicing these loans.

Some lenders and all secondary markets have contracts with student loan services, which are companies that take care of all the details, like collecting and processing payments, handling inquiries and maintaining loan records.

This not only happens with student loans but to all types of lenders dealing with loans. One of our homes changed mortgage lenders three times within a period of six years that we lived in that home.

Asking the question of whether a lender will sell your loan is the wrong question to ask. The question you need to ask is whether or not the new lender will offer the same benefits and terms. It really does not matter whom you make the check out to.

What Happens When My Loan Is Sold or Transferred?

You will receive a letter from the lender who is selling your loan. When the loan is actually sold, the new owner or its servicer will send you a letter that explains why the loan was sold, who the new owner is, where to send your payments and where to call if you have any questions.

The letter will include a statement listing the loans they are servicing for you, the dates you took out the loans, the interest rate, the names of the loan programs, and the total amount you owe.

The new owner or its servicer (a servicer is a loan service/company that works for many lenders and secondary markets at the same time) may send you a new payment book or may offer you some services that were not available from your original lender.

You are now indebted to the new owner of your loan, no longer to the original lender that you signed papers with. There should in no way be any change in the rate and terms of your student loan.

There will be that question and concern with any new lender if any changes have been made. As soon as you obtain the name of the new lender, I would ask in writing for a guarantee of your former benefits you received with your prior lender.

There rarely is a problem, however, this might make you feel more secure. Also, if there is a problem or if you have any questions you would like to discuss with your College Board loan, call 888-272-5543.

Read your first statement from the new owner carefully and make sure that the information is up to date. When a loan is sold, it can take up to 60 days for your payments to be forwarded from your original lender to the new owner.

Call your new servicer if you are having difficulties in anyway. They are there to serve you and are glad to have your loan. Let’s face it, that’s their job and how they make their living.