What Is The Best Student Loan Servicer

Unfortunately, when it comes to federal student loan servicers, you can't "have it your way." The Department of Education chooses your student loan servicer for you when you first take out your federal student loan.

Nearly 90% of all federal student loans will be assigned to one of the "Big Four": FedLoan Servicing, Great Lakes, Navient, or Nelnet. The rest will be assigned to one of five nonprofit servicers: Cornerstone, Granite State, HESC, MOHELA, or OSLA.

To call one of these servicers the "best" would be kind of like trying to pick the best strain of the flu to come down with. But here's how we decided which servicers were the "best of the worst."

Best federal student loan servicer ranking methodology

To come up with our list, we began by downloading data from all the student loan servicer complaints that the Consumer Financial Protection Bureau (CFPB) received from May 1, 2018 to May 1, 2019.

Next, we took data from the Department of Education's Federal Student Aid website to determine the number of recipients for each servicer.

Finally, we divided each servicer's number of complaints by their number of recipients and multiplied the result by one million to give us the number of federal student loan complaints per one million loan recipients.

Best federal student loan servicers — ranked

Below, are all nine federal loan servicers ranked from worst to … least-worst.

9. Navient

No surprise here. Navient has consistently been one of the most hated federal student loan servicers for quite some time now.

And the CFPB confirmed that reality again. With 5.66 million federal loans that they're currently servicing, they manage 21% of all federal student loans. Within the last year, the CFPB has fielded 3,717 complaints from Navient customers.

Factoring in the number of borrowers that the Federal Student Aid office says it services, that equates to 656 complaints per million customers. That's over 2.5 times more complaints per customer than the company with the second-most complaints (FedLoan).

To put things into an even better perspective, Navient accounted for 45% of all student loan servicing complaints the CFPB has received over the past year.

In fact, the CFPB, along with the Illinois and Washington attorneys general, sued Navient in January 2017. Among other things, the lawsuit alleges that Navient steered borrowers toward multiple forbearances instead of enrolling them in income-driven repayment plans.

Regardless of how the lawsuit pans out, there's no doubt that Navient is rightfully deserving of being dead last on this list.

8. FedLoan Servicing (PHEAA)

FedLoan Servicing supports various borrowers during repayment, including those who are under the Public Service Loan Forgiveness program (PSLF). Of all the federal loan servicers, FedLoan Servicing currently services the largest percentage of outstanding loans at 27%. That's unfortunate for a lot of people because when you look at customer complaints, FedLoan Servicing and Navient really separate themselves from everyone else — in a bad way.

While FedLoan fared 2.5 times better than Navient, the CFPB still received 251 complaints per million customers for FedLoan, which was over twice as much as many complaints as all the other servicers on the list.

In all, the CFPB received 1,829 complaints from FedLoan Servicing customers from May 1, 2018 to May 1, 2019.

Student Loan Planner® has written a great deal about issues borrowers have with FedLoan, including an article recently that addressed complaints from readers who were being wrongly kicked off Income-Based Repayment (IBR).

7. MOHELA

The Higher Education Loan Authority of the State of Missouri (MOHELA) is the first nonprofit federal student loan servicer to make it onto our list, narrowly squeaking ahead of Nelnet. Here's why.

There tends to be a naturally positive correlation between the number of loans a company services and the number of complaints it gets. And this isn't just the sheer number of complaints (which would obviously be expected), but the percentage of customers who make complaints as well.

In other words, smaller loan servicers not only have fewer total complaints but also tend to have fewer complaints per customer. This is probably because servicers who have fewer customers are able to give the ones they have better customer service and attention.

Smaller Doesn't Always Mean Better

Despite the fact that MOHELA has far fewer customers than Nelnet, they ended up receiving only 10 fewer complaints per million customers. That's not good.

And the numbers could actually be even worse. Since the Department of Education doesn't tell us exactly how many recipients each nonprofit servicer has, we had to do our best to estimate.

To do that, we took the 3 million customers serviced by nonprofits and divided it by five (the total number of nonprofit servicers) to give us an estimated customer base of 600,000 per nonprofit servicer. But this is only an estimate. If MOHELA actually has less customers, then its ratio of customers to complaints could be even worse.

If MOHELA is your student loan servicer, you may want to check out our breakdown of the biggest headaches MOHELA customers deal with.

6. Nelnet

If you were assigned Nelnet as your student loan servicer, you could look at it one of two ways:

On one hand, you could be bummed that you've been assigned one of the "Big Four."
On the other hand, you could be thankful you weren't assigned FedLoan or Navient.

Although it has had its own fair share of complaints, Nelnet customers tend to be much happier on the whole.

In total, Nelnet received 120 complaints per million customers over the past year. Not terrible for a company that services over 19% of all student loans.

That's still a significant number of complaints, though. If you're wondering what Nelnet customers tend to feel frustrated about, you may want to read the most common complaints about Nelnet.

5. Cornerstone

Next on the list is another nonprofit federal student loan servicer — the Utah System of Higher Education, also known as Cornerstone.

Despite having "Utah" in its name, you could be assigned Cornerstone as your service regardless of which state you live in. Cornerstone ended up with 25 complaints over the past year.

That sounds pretty good. But going with the 600,000 customer estimate again, that comes out to 42 complaints per million customers. That's twice as many complaints as the next two servicers on our list.

4. HESC / EdFinancial Services

The Higher Education Services Corporation (HESC) — also known as EdFinancial Services — ended up finishing in a dead heat with Granite State in customer complaints. Both had 13 complaints filed with the CFPB over the past year. That's only about 22 complaints per million customers.

While that sounds pretty good, you may still run into issues with HESC if you're assigned to it as your servicer. In Student Loan Planner®'s own survey from the summer of 2018, only two respondents had their loans with HESC.

Both responses were negative.

One person said "no" when asked if HESC resolve their issue, and the other said "somewhat."

When asked why they had a bad experience with HESC, one person said HESC has "uninformed individuals on the calling end." The other said HESC has "no empathy" and is "short with clients."

Ouch. Another reminder of why this list should be considered "best of the worst."

3. Granite State

As mentioned above, Granite State Management & Resources, or GSM&R Student Loan Servicing, ended up tying with HESC in the number of complaints customers submitted to the CFPB.

At a rate of 22 complaints per million customers, that's nearly 30 times fewer complaints per customer than Navient.

2. OSLA

The Oklahoma Student Loan Authority (OSLA) is a servicer that has been around since the 1970s. And they seem to know what they're doing — only 11 OSLA customers filed complaints with the CFPB over the past year.

Again, your chance of having OSLA as your servicer (or any nonprofit servicer for that matter) is small. But if you are assigned to OSLA, consider yourself very lucky.

1. Great Lakes

You might not have expected that one of the Big Four to rank as the best federal student loan servicer. But Great Lakes has, for years, been known for the great way it takes care of its customers.

When it comes to CFPB complaints, Great Lakes received 229 over the past year. That might not sound great on the surface. But keep in mind that Great Lakes has over 6 million student loan borrowers it serves.

Taking that into account, Great Lakes has a complaint rate of about 36 complaints per one million customers. That's over three times less than Nelnet, seven times less than FedLoan Servicing and 18 times less than Navient!

Even in Student Loan Planner®'s own survey, several of our respondents had good things to say about Great Lakes.

It was a bit concerning when the news broke that Great Lakes was bought out by Nelnet. But for now, it looks like it's continuing to operate independently.

Time will tell, but so far it seems like Great Lakes hasn't changed its policies or customer service one bit. Here's to hoping things stay that way!

What can you do if your servicer is among the worst of the worst?

If you've been assigned one of the most hated federal loan servicers, you may be wondering if you can switch to a better company.

Unfortunately, the short answer is no. The Department of Education doesn't let borrowers switch student loan servicers. There are only two ways that you can choose a different servicer than the one you've been assigned.

Direct loan consolidation

The first way is to consolidate your federal student loans through a Direct Loan consolidation. In this situation, the Federal Student Aid office will allow you to choose who you'd like to be your next servicer from a list.

Student loan refinance

The other option is to refinance your federal student loans. With student loan refinancing, you can choose whichever lender you want. You'd hopefully be able to cut your interest rate as well.

However, refinancing federal student loans can be a dangerous move. You'll lose all federal benefits such as Income-Driven Repayment (IDR) plans and the ability to pursue PSLF or other forgiveness programs.

To find out if a student loan refinance would be right for your situation, consider having a discussion with one of Student Loan Planner®'s consultants.