The 10 Largest Student Loan Companies

loan companiesNavigating the jungle of student loans can be intimidating. Fortunately, there are companies that specialize in bringing the loans to your doorstep, but even that opens up a whole new Pandora’s Box. Who are these companies? How do they work? What should you know about the student loan industry, and the companies in particular, before sitting down to talk business? Read on to learn more about student loan companies before making a decision, as well as details on the 10 largest student loan companies.

What is a Student Loan Company?

Student loan companies (also known as student loan lenders or servicers) are directly responsible for your student loan. Even if you took out a federal loan (Stafford, PLUS, etc.), you won’t do business with the Department of Education; your point of contact will be with the student loan company on practically everything to do with your loan:

Those last two points play a critical role in the relationship between you as a student, and the student loan provider as to the go-to entity for successfully staying on top of your repayments. After being approved for a federal loan (assuming you are not in default on a pre-existing loan and have not been convicted of specific crimes), the Department of Education will assign your case to a loan servicer after the disbursement of the loan. The loan servicer will reach out to you with a choice of plans for repayment, but will also welcome you to get in touch with them if (and when) you need to change that plan.

In a worst-case scenario, you may find yourself completely unable to stay ahead of your payments. You may lose your job, suffer an emergency, or take on too much debt. If this happens, it is the student loan company again that you will have to talk to. They will educate you on what your options are, and offer suggestions on the viability of each, all with the goal of keeping you above water (and away from collections agencies) and eventually getting their money back (even if it takes decades).

Student loan companies make their money by the Department of Education paying them a monthly fee for processing your payments and taking care of the loan. The fee is generally quite small, but given the sheer number of students who apply for loans – 12 million, according to the Chronicle of Higher Education and American Student Assistance – the figures rapidly add up, making the student loan industry a very lucrative one. The Congressional Budget Office projected more than $50 billion in profits on student loans in the fiscal year of 2013, as reported by USA Today. ABC 7 News put it into perspective – government services like Freddie Mac charge an interest rate of 4.5 percent, whereas an unsubsidized student loan can run borrowers as much as 6.8 percent.

Protecting Borrowers’ Rights

borrower's rightsWith this much money at stake (and with how desperately, and unwittingly, people are in taking loans to finance their education), there are laws in place to protect borrowers’ rights. The National Consumer Law Center operates the Student Loan Borrower Assistance Project. The mission of the project is to give students and their families “information about student loan rights and responsibilities.”

Other initiatives include the proposed Student Loan Borrower Bill of Rights Act, sponsored by four Senate Democrats, including Elizabeth Warren of Massachusetts. In summarizing the Bill, Bloomberg Business says the bill focuses on greater disclosure, emphasis on repayment plans, and, crucially, stipulating how student loan servicers must credit accounts in a way that minimizes what a borrower owes (in the case when a student has multiple loans). The Consumer Financial Protection Bureau has identified this as a problem when it comes to private student loans, saying that the servicers’ decision on how to allocate payments on multiple loans “is not always in the consumers’ best interest.” This would be one area in which the Student Loan Borrower Bill of Rights Act would seek to introduce control and possibly regulation.

Specifics of the 10 Largest Student Loan Companies

You probably have heard some of the names on the list of the 10 largest student loan companies. You may be surprised that some of the companies on this list offer student loans. And there may be a couple you’ve never even heard of. The following 10 providers are the key players in the student loan industry. Whether you’ve taken out a federal loan, a private loan, or even a combination, you’re likely going to be doing business with one of these servicers.

Selecting the Right Student Loan Company

All the companies on this list – and, indeed, any legitimate student loan company – offer many benefits to the right borrower. It’s tempting to simply compare each provider’s rates, but crucial for consideration are the loan’s terms: What is the length of the loan? Under what circumstances will the loan be forgiven? Will your repayment amount change once you graduate?

Also take into account if the loan servicer is student-friendly and student-savvy. Banks that operate student loan services may not be as focused on your needs and identity as a student, as a lender that is specialized and more oriented towards a student (without the burdens of operating other types of loan services, such as a mortgage). On the other hand, large lenders have vast amounts of capital and resources that could be useful as you negotiate the repayment of your loan.

Need a private student loan? Compare your student loan options all in one place. SimpleTuition

Financial Aid Basics