Student loans are owned by the federal government or private institutions, depending on the type of student loan. Federal student loans are owned by the U.S. Department of Education while private student loans are owned by the financial institution that granted them. Learn more how who owns student loans and how to find out who owns your student loan.
Key Takeaways
- Student loans in the U.S. are generally either owned by the federal government or financial institutions.
- The federal government fully guarantees almost all student loans.
- Some student loans are held by agencies like Sallie Mae or a third-party loan servicing company.
- Federal student loans can include Direct Loans, Perkins Loans, and Federal Family Education Loans.
- Private companies may own federal loans.
Ownership of Student Loans
Generally either the federal government or a financial institutions own a student loan.
A student loan may be originated by one institution but owned by another institution, and then guaranteed by yet another. It can also be serviced by other agencies. A loan servicer, which can change often, typically manages the billing process and accepts payments, and serve as the point of contact for the borrower for questions and concerns.
So, because the owner of your loan may be different from your main contact with the loan, determining who owns your student loan can be difficult. It may be even more difficult if you refinance your loan.
The owner of your student loan will depend on the type of loan you took out, although the federal government will likely play some role in your loan, such as backing the loan. Federal student loans can include Direct Loans, Perkins Loans, and Federal Family Education Loans. But keep in mind that federal loans can be held by private companies.
Most lenders that originate student loans are large institutions, such as large banks or the federal government. After a loan is originated, however, it becomes an asset that can be bought and sold on the market. Banks often sell student loans to another intermediary, which improves their capital ratio and allows them to make more loans.
Almost all student loans are fully guaranteed by the government, so banks can sell them for a higher price because default risk is not transferred with the asset.
Non-Government Owners
Most student loans that are not owned by the government are held by the lender or a third-party loan servicing company. Originators and third parties can each perform in-house collection services or contract that duty out to a collection agency. Some of the largest private student loan companies include SoFi Technologies, Discover Financial Services, and Navient.
Many student loans are also owned by agencies such as Sallie Mae or private companies like NelNet Inc. that have relationships with the Department of Education.
The Federal Government as Creditor
Student loans debt is increasingly significantly, with total U.S. student loan debt reaching more than $1.7 trillion in the fourth quarter of 2022, according to Federal Reserve data. A majority of that debt is owned by the federal government.
Prior to the Affordable Care Act, a majority of student loans originated with a private lender but were guaranteed by the government, meaning taxpayers would foot the bill if student borrowers defaulted. In 2010, the Congressional Budget Office (CBO) estimated only 55% of loans fell into this category, compared to about 93% today.
At one time, the federal government did not own any student loans, although it has been guaranteeing loans since at least 1965. Student loans accounted for nearly 20% of all U.S. government assets in 2020.
How to Determine Who Owns Your Student Loan
You can take several steps to determine who owns your student loan. First you can check your credit report from one of the three major credit bureaus: Experian, Equifax, and TransUnion. The credit report may list your service provider for your student loan.
You can also contact your school or college's financial aid department for information on who owns your student loan. Finally, you can also check the U.S. Department of Education's Federal Student Aid site.
Once you find out who owns your loan, you can ensure your contact information is up-to-date and learn about any relief programs you may qualify for. You can take advantage of potential benefits like income-driven repayment plans.
The Bottom Line
Knowing who owns and services your student loan can be important to ensuring your loan remains current and that you understand the benefits and relief programs available to you. To find out who owns your student loan, you can start by checking with your school's financial aid office and the U.S. Department of Education's Federal Student Aid site.
FAQs
Federal student loans are owned by the U.S. Department of Education while private student loans are owned by the financial institution that granted them.
Who owns the majority of student loan debt? ›
Total federal student loan debt
Most student loans — about 92.5% — are owned by the government. Total federal student loan borrowers: 43.2 million.
Who is responsible for student loan debt? ›
When the time comes to start making payments, only the student is obligated to repay these loans — not the parents. In fact, there's no co-signer. If the student defaults on a federal student loan, it will affect the student's credit and won't be reported on the parent's credit history.
Who bought my student loan debt? ›
The federal government or a commercial entity owns your student loans. Private companies own all private loans. The U.S. Department of Education holds most federal loans. Both the Department of Education and private institutions partner with third parties called student loan servicers.
Does the government own all student loans? ›
Generally, there are two types of student loans—federal and private. Federal student loans and federal parent loans: These loans are funded by the federal government. Private student loans: These loans are nonfederal loans, made by a lender such as a bank, credit union, state agency, or a school.
Who actually holds student debt? ›
Federal student loans are owned by the U.S. Department of Education while private student loans are owned by the financial institution that granted them.
Who owes all that student debt? ›
Who is doing all this borrowing for college? A. About 75% of student loan borrowers took loans to go to two- or four-year colleges; they account for about half of all student loan debt outstanding. The remaining 25% of borrowers went to graduate school; they account for the other half of the debt outstanding.
Who are student loans backed by? ›
The federal government began guaranteeing student loans provided by banks and non-profit lenders in 1965, creating the program that is now called the Federal Family Education Loan (FFEL) program.
Who is responsible for student loan debt after death? ›
If you die, your student loans tend to go with you. With federal student loans, your family isn't obligated to repay your outstanding debt. If you have private student loans, you might be on the hook for those payments, but many times, those loans are discharged in a similar fashion to federal student loans.
Who runs student loans? ›
The federal government owns most federal student loans via the U.S. Department of Education. However, the government agency doesn't service its loans. Instead, it relies on private companies to handle payments, repayment plans, customer service, and more.
The loan holder of a Direct Loan is the U.S. Department of Education. A loan servicer is a company we assign to handle the billing and other services on your federal student loan on our behalf, at no cost to you.
Does the government make money off student loans? ›
But is the government really making money off of student loans? Profit or loss? By one estimate, the federal student loan program could turn a profit of $1.6 billion in 2016, according to the Congressional Budget Office. That's not a huge profit when you consider that the program lends out about $100 billion a year.
Who cancelled student loan debt? ›
President Biden, Vice President Harris, and the U.S. Department of Education have announced a three-part plan to help working and middle-class federal student loan borrowers transition back to regular payment as pandemic-related support expires. This plan includes loan forgiveness of up to $20,000.
Which president started the student loan forgiveness? ›
The Public Service Loan Forgiveness (PSLF) program is a United States government program that was created under the College Cost Reduction and Access Act of 2007 signed into law by President George W.
Who owns the majority of student loans? ›
Mostly the U.S. government. According to the office of Federal Student Aid, $1.62 trillion, or 93% of all student loan debt, is federal student loans. The remaining $131 billion (7%) is owed to private lenders, according to this Q3 2021 report from MeasureOne.
When did student loans become privatized? ›
In 2010, Congress eliminated the FFELP, meaning the federal government was now solely in the direct loan business. Sallie Mae continued servicing federal loans until 2014, but has since provided only private loans.
Where does the majority of student loan debt come from? ›
Federal Student Loan Debt
While a slim majority of undergraduates borrow money from the federal government, the total amount they borrow accounts for 92.8% of student loan debt.
Who carries most student loan debt? ›
Unsurprisingly, younger people hold the majority of student loan debt. Borrowers between the ages of 25 and 34 carry about $500 billion in federal student loans—the majority of people in this age group owe between $10,000 and $40,000. However, people carry their education debt well into middle-age and beyond.
What demographic holds the most student loan debt? ›
Black adults are more than twice as likely than white adults to have student loan debt. The following graph includes federal and private student loan debt among all adults. On average, Black adults in the U.S. also hold higher student loan debt balances than borrowers of other races.
What percentage of student debt is held by the government? ›
Total student loan debt statistics
As of the second quarter of 2024, student loan debt in the U.S. stands at a total of over $1.74 trillion. More than 92% of this is federal student loan debt, while the remaining amount is owed on private student loans.
