If your student loans have recently been transferred to a new servicer, you’re not alone. Millions of borrowers experience this shift at some point, especially now, as federal loan servicing contracts change and private lenders restructure.
But here’s what many don’t realize: a student loan transfer isn’t just a behind-the-scenes administrative update. It’s a potential minefield for mistakes that can cost you money, mess up your repayment strategy, or even damage your credit score.
Here are seven of the most common (and costly) mistakes people make when their student loans get transferred and how you can avoid them.
1. Ignoring Transfer Notifications
When a loan is transferred, you should receive a notice from both your current servicer and your new one. These usually arrive via email or mail and contain important details, such as your new account number, the effective date of the transfer, and payment instructions.
Too many borrowers overlook these messages or mistake them for spam. By the time they realize what’s happening, they’ve missed a due date or lost access to their old payment portal.
Don’t let that happen. As soon as you receive any notice about a loan transfer, open it, read it thoroughly, and take screenshots or save the documents for your records.
2. Not Setting Up a New Online Account Right Away
Once your loan has officially moved to a new servicer, your old login credentials won’t work anymore. You’ll need to create a new online account with the new company to view balances, make payments, and manage your repayment plan.
Many people forget to do this right away, only to find themselves locked out when a bill is due or a deadline approaches. Even worse, some miss updates about their autopay setup or forbearance status.
To stay on top of your loans, make it a priority to register with the new servicer immediately, even if your next payment isn’t due for weeks.
3. Assuming Autopay Will Transfer Automatically
One of the biggest myths about loan transfers? That your automatic payments will just carry over seamlessly.
In reality, most new servicers do not transfer your autopay enrollment. That means you could miss a payment without realizing it—triggering late fees or even a ding to your credit. As soon as you’ve set up your new account, double-check your autopay settings. You may need to re-enroll and verify your banking details. And while you’re at it, set a reminder to confirm the first payment was successfully processed.
4. Overlooking Payment History Discrepancies
When loans are moved, your repayment history is supposed to be transferred with them. But sometimes, information gets lost in translation. Months of on-time payments might vanish. Your total balance could look off. Or your loan types might be miscategorized.
If you’re applying for Public Service Loan Forgiveness (PSLF) or an income-driven repayment (IDR) plan, this kind of record-keeping error can have serious consequences.
Check your payment history carefully once the new servicer has your loans. If something looks wrong, contact both your old and new servicers immediately and request a correction.
5. Missing Changes to Loan Terms or Benefits
While your interest rate and federal protections won’t change in a transfer, the experience of working with a new servicer definitely can. Some are more proactive with customer service, while others have clunky portals, longer response times, or stricter rules around forbearance and deferment.
And if your loan is private, not federal, there’s an even higher chance that your loan terms (such as grace periods or late fees) might shift under the new lender. Don’t assume everything is the same. Review your new servicer’s policies and ask questions if you’re unsure about how they handle specific benefits.
6. Letting a Grace Period Lapse Without a Plan
If you recently graduated or left school, your transferred loan may be in a grace period, typically six months before repayment begins. But a transfer can disrupt how (and when) that grace period is tracked.
In some cases, borrowers lose track of time, think their grace period was extended, or misunderstand when their first payment is due under the new servicer. That leads to missed payments, confusion, and unnecessary stress.
Take control by asking your new servicer to confirm the exact date your first payment is due. Set calendar reminders, and don’t assume you’ll get another notice before your account enters active repayment.
7. Not Documenting Everything
Transfers can get messy, especially if you run into errors, lost payments, or disputes between old and new servicers. That’s why documentation is your best friend.
Keep copies of all emails, letters, and screenshots from both servicers. Write down the dates you made payments or enrolled in plans. Save your confirmation numbers and payment receipts.
If something goes wrong, having this documentation can protect your credit, support your case with a student loan ombudsman, or even help you escalate the issue to the Department of Education or a consumer protection agency.
Staying On Top of Everything is Important
Loan transfers don’t have to be chaotic, but they often are if you’re not paying close attention. The most important thing you can do during a transfer is to stay proactive. Confirm the details, set up your new account, and keep a close eye on your balance and payments over the first few months.
You’ve worked hard to manage your student debt. Don’t let a servicing change undo your progress or throw your plans off track. By avoiding these seven costly mistakes, you’ll protect your credit, keep your repayment on course, and avoid financial headaches down the line.
Have you ever experienced a student loan transfer? What was the smoothest or most frustrating part of the process for you?
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