Who Owns My Loans?

There is often times a lot of confusion on the distinction between who owns their loan and who the servicer is.  This confusion comes up most often when a loan is transferred from one Department of Education servicer to another.

If you have Direct Loans, your loans are owned by the Department of Education.  If you have an FFELP loan, it is either owned by the bank that disbursed the loan and backed by the DOE or by the DOE itself if it bought the loan as part of the bailout.

But in either case banks or the government doesn’t want to take care of the loans because of the mountains of questions and paperwork that is involved in the process.  As a result servicers were chosen to take care of these loans.

So in conclusion the person who disbursed your loan is the owner, while the person who you call if you have questions or need a deferment or forbearance is your servicer.  This is a distinction that is important if it ever comes up on future paperwork.