can i transfer education loan to another bank

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How to transfer your student loans to a different lender

You don’t have to stay with your student loan lender if you don’t want to. find out how to transfer student loans to another lender..

If you’re no longer satisfied with your current lender, you may want to transfer your student loans to another one. Find out how. ( Shutterstock )

At some point, you may want or need to change your student loan servicer or lender. This might be because you’re no longer satisfied with their service, your loan terms, or both.  

While a servicer is the company that manages your loan, a lender originates the loan or lends the money for it. Changing your servicer won’t transfer your student loan to another lender. But there are ways to switch lenders — and simultaneously get a new loan servicer.

If you’re considering refinancing with a private student loan, Credible makes it easy to compare student loan refinance rates from multiple lenders — all in one place, and without affecting your credit.

Can you transfer your student loans to another lender?

Switching servicers through federal student loan consolidation, transferring lenders by refinancing your private student loans, what happens after you transfer student loans to another lender, how to refinance your student loans.

The U.S. Department of Education is your lender when you take out a federal student loan. The government funds federal student loans, but hands off billing, managing income-driven repayment plans, assessing forgiveness eligibility, and other services to a loan servicer.

If you have private student loans, a private company makes and owns your loan. The private lender typically will also service the loans it makes.

You may want to transfer your student loans to another lender for several reasons. Maybe you’re frustrated with the customer service experience. Or perhaps you’re looking for a better interest rate and terms. 

No matter your situation, you should know that private lenders can sell or transfer your student loan debt to different creditors. But in most cases, you can’t initiate the process as a borrower. 

The good news is you can transfer private and federal student loans by refinancing into a new loan. And, while consolidating your federal student loans into a federal Direct Consolidation Loan won’t get you a new lender, it could land your loans with a new student loan servicer .

10 COMPANIES THAT HELP YOU REPAY YOUR STUDENT LOANS

If you have federal student loans, consolidation is an option. When you consolidate your federal student loans , you get a new Direct Consolidation Loan from the Department of Education and use it to repay one or more existing federal loans. 

The interest rate you receive will be the weighted average of the interest rates on your other loans. While consolidation doesn’t guarantee a lower interest rate, it can lead to more flexible terms and lower monthly payments. 

You might want to explore this option if you have multiple federal student loans with different servicers and are overwhelmed with the debt payoff process. Consolidating will give you one payment and just one servicer to deal with. Also, if you’re having trouble paying back your federal student loans, locking in a longer repayment term through consolidation can help ease some financial stress. 

Just keep in mind that you’ll likely pay more interest in exchange for extending your repayment term. Also, any payments you’ve already made won’t count toward forgiveness available through Public Service Loan Forgiveness or income-driven repayment plans. 

HOW TO REFINANCE STUDENT LOANS WITH BAD CREDIT

Student loan refinancing is when you take out a new private loan with better terms to pay back your existing loan. This strategy may work for both private and federal student loans. With a student loan refinance you may repay your student loans faster, reduce your monthly payments, and lower your interest rate to potentially save hundreds or thousands of dollars over time. 

You may benefit from student loan refinancing if:

• Your credit has improved since you took out your original loans and you think you can qualify for a better rate than the ones you currently have.
• You’re paying a variable interest rate and prefer a fixed rate you can budget for in advance.
• You want to extend your repayment term and lower your monthly payments.

But before you move forward with refinancing, know that it can be difficult to qualify for a private student loan refinance if you don’t have a good or excellent credit score, or a cosigner with good credit. Also, if you refinance your federal student loans into a private student loan, you’ll no longer have access to federal benefits like income-driven repayment and student loan forgiveness. 

Comparing student loan refinance rates from multiple lenders can help you find the best rate and terms available to you. With Credible, you can easily compare student loan refinance rates in minutes.

Once you transfer your student loans to another lender, you can expect some changes. Depending on the strategy you chose and the lender you decided on, you may get a different interest rate and monthly payment amount. The transfer might also affect the total amount of interest you pay overall and how long it takes you to repay the loan. 

If you take out a federal Direct Consolidation Loan, you could get a new loan servicer. The Department of Education has a list of loan servicing companies it works with, and their contact information, on StudentAid.gov.

STUDENT LOAN REFINANCING CAN POTENTIALLY SAVE BORROWERS $5K WHILE FIXED RATES ARE LOW

If you want to refinance your student loans , follow these steps:

• Check your credit. When you apply for a student loan refinance, a lender will check your credit. This is why you should know where you stand credit wise before you apply. You can visit AnnualCreditReport.com to pull free copies of your credit reports from the three major bureaus. Dispute any errors or inaccuracies you find, as they may interfere with your ability to qualify for a refinance.
• Shop around. Not all student loan refinancing options are created equal. That’s why you should compare the rates and terms of at least three lenders to find out which option will save you the most money. Also, compare the offers you find to your current student loans to ensure you don’t choose one with higher rates and less favorable terms.
• Apply with the lender of your choice. Once you decide on a lender, complete the refinancing application. While each lender has its own unique application process, most will allow you to apply online. Be sure to fill out your application thoroughly and accurately to avoid delays.
• Close on the loan. After you apply for the loan, the lender will review your application and get back to you with a decision, usually within a few days. Keep in mind that if you prequalified for a loan, there’s no guarantee you’ll get approved for it. Your lender will inform you of your options if this happens. If you’re approved, you’ll review and sign your loan documents.
• Continue to pay your original student loans. You’ll need to keep making payments on your original loans until the new lender gives you documentation that lets you know your existing loans have been paid off. Then, you’ll start to make payments on the new loan.
• Set up automatic payments for your new loan. If you’d like to simplify the loan payment process and avoid missing payments, you might want to enroll in automatic payments for your new loan. Fortunately, many lenders offer an autopay discount that can help you save even more on interest. If you do sign up for autopay, make sure you always have enough money in your account to cover your monthly payments. Remember, you can pay more than the minimum each month if you want to pay off your balance sooner.

If you’re ready to refinance your student loans, you can get started with Credible, where you can compare rates from multiple lenders.

How to Transfer Student Loans to Another Lender

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Erin Kinkade, CFP®, ChFC®, works as a financial planner at AAFMAA Wealth Management & Trust. Erin prepares comprehensive financial plans for military veterans and their families.

If you’re unhappy with your current loan servicer or are interested in getting better terms, you may wonder whether you can transfer student loans to another lender. You can—but how you go about it will depend on whether you have federal or private student loans. 

Transferring student loans to another lender could help you unlock better terms or streamline your monthly payments. However, you should consider the potential downsides before making a move. We’ll cover the pros and cons to help you decide whether it makes sense for you.

Table of Contents Skip to Section

Can I transfer my student loans to another lender?

How to transfer private student loans to another lender, how to transfer federal student loans to another lender or servicer, what happens after i transfer my student loans.

Yes, it’s possible to transfer your student loans to another lender . You may choose to transfer one of your loans or all of them, depending on your reasons for making the switch. 

You can transfer student loans to another lender one of two ways:

• Refinancing private student loans
• Combining federal loans with a Direct Consolidation loan

Refinancing student loans works by allowing you to take out a new loan and use the proceeds to pay off your debt. Once the old loans are paid off, you repay the refinance loan according to the lender’s terms. Refinancing might allow you to get a different interest rate, loan term, or monthly payment. 

Consolidation allows you to combine your federal student loans into a single loan. You then have one monthly payment to make to your servicer each month. Consolidating federal loans may result in a change of loan servicer. 

That’s a simple explanation of student loan refinancing vs. consolidation. Next up, we’ll take a closer look at how both work. 

If you’re unsure whether you have federal or private loans, you can check your most recent loan statement for a description of your loans or reach out to your loan servicer to ask. 

Refinancing any loan, including student loans, means replacing one or more loans with a new one. The process might sound intimidating, but refinancing student loans is easier than you might think. 

Here’s a rundown of how the process typically works, step by step. 

• Step 1 : Identify which loans you want to refinance . This might be some or all of of your loans. When you apply for a refinance loan, the lender will ask for details about your loans, including the amount owed. 
• Step 2 : Compare student loan refinancing options . You might be able to refinance your loans with your current lender, but it’s worth comparing refinance rates elsewhere. Getting rate quotes from at least three lenders is a smart way to estimate your potential interest savings. 
• Step 3 : Choose a lender, and complete a refinance application . If you’ve selected a lender, the next step is filling out the application. You’ll need to tell the lender about your loans and your financial situation, including your employment status, income, and other debts. 
• Step 4 : Review the loan offer . Once approved for student loan refinancing, you’ll have a chance to review the loan offer before accepting. If you’re happy with it, you can finalize the paperwork and sign off on the loan agreement. 
• Step 5 : Pay off your loans . Your new lender should pay off your old loans for you, which can take a couple of weeks. You’ll want to continue making payments to the old loans as scheduled until the payoff is confirmed, at which point you can switch over to paying the new lender. 

So why would you want to transfer student loans to another lender? It could be because you’re just not happy with the one you have, but a better reason is to lower your interest to reduce the total cost of your loans. 

Let’s say you owe $50,000 with a 10% interest rate and 10 years left on your loan, but you can refinance at a 5% interest rate: 

You could use that extra $130 to invest, save for a down payment, or pay down other loans.

Refinancing may also help you pay off your student loan ahead of schedule while paying less interest. For example, let’s say you decide to add the extra $130 to your student loan payments. 

In this case, you would pay off your loans in about seven years and eight months while saving an additional $10,296.97 in total interest.

Pros of refinancing private student loans

As the previous example illustrates, a significant benefit of student loan refinancing is the money you can save. Even lowering your interest rate by a quarter of a percentage point could make a difference in how much you pay for your loans over time. 

If you’re interested in reducing interest rates or simplifying monthly payments, refinancing could help you do it. However, it’s not always ideal. Whether it makes sense for you can depend on where you are in your loan repayment journey and what your goals are. 

You may end up with a lower monthly payment, which could build some breathing room into your budget.

If you choose a shorter repayment term, you’ll be able to get out of student loan debt faster.

Having just one loan payment to make each month versus several can make it easier to keep track of your finances.

Potential savings on interest over the long term.

A longer repayment term could lower your monthly payment, but it could mean paying more in total interest over the life of the loan. 

Lenders often require good credit for student loan refinancing, which might make it necessary to have a cosigner. 

If you use a cosigner to refinance student loans, they may not be released from the loan until it’s paid in full. 

Here’s an example of how refinancing private student loans could cost you money. 

Let’s say you owe $50,000 at 10% APR and have 10 years left in your loan term but decide to refinance to a 20-year term at 6%. 

As you can see, your monthly payments would be lower, but you’d still pay more by increasing your loan term.

How to qualify for a refinance

Qualifying for student loan refinancing depends on the lender. All lenders have unique criteria for approval. 

A lender may require you to have the following:

• A credit score of 650 or higher
• Between $1,000 and $500,000 in student loan debt
• At least two years of employment history, or proof that you have sufficient income to pay your loans
• A low debt-to-income ratio , which measures how much of your income goes to debt repayment each month
• A cosigner if you don’t meet minimum credit score requirements

A cosigner signs the loans with you, and the lender can hold them responsible for the debt if you fail to pay. Having a cosigner could work in your favor if you can leverage their good credit for a lower interest rate. However, defaulting on cosigned student loans could damage their finances and yours, as well as your relationship.  

Some lenders might consider other factors to determine your creditworthiness. For example, a lender might look at your area of study, career path, and projected future earnings to decide whether to approve you for a refinance loan. 

When you transfer student loans, it’s important to know the difference between your lender and loan servicer. With federal loans, your lender is the government. This is who gives you the money to pay for your education. Your loan servicer, meanwhile, is the company assigned to collect payments for those loans. 

If you’re consolidating federal student loans, you might get a new loan servicer, but your lender would be the same. 

If you’re refinancing federal loans, which you can do, that would involve a move to a new private lender. 

If you want to keep your federal student loans

If you want to keep your federal student loans as they are, you have two main options. Which one makes the most sense can depend on whether you plan to seek loan forgiveness at any point. 

Option 1: Consolidate with a new loan servicer

First, you can consolidate your student loans and choose a new student loan servicer. Consolidating multiple loans into one can simplify the repayment process by reducing the number of payments you need to make. You can do this with a Direct Consolidation Loan .

However, make sure you’re not giving up any benefits by consolidating. For example, if you’re working toward Public Service Loan Forgiveness (PSLF) or Income-Driven Repayment (IDR) loan forgiveness, you could lose credit for all your previous payments if you consolidate. 

Also, if you have Perkins loans and consolidate, you won’t be eligible for Perkins loan cancellation. You can see what type of federal loans you have by logging into your account on the federal Student Aid website . 

Option 2: Try for loan forgiveness

Another way to change loan servicers is to work toward PSLF. All PSLF applications are managed by Mohela as of December 2022. So if Mohela isn’t your loan servicer now, you might be able to make a switch this way by seeking forgiveness for your loans. 

This option is only available for borrowers who work in an eligible government or nonprofit organization and plan to work there for 10 years while making payments. You’ll also need to be enrolled in an income-driven repayment plan to qualify.

If you want to switch to a private lender

After extending federal student loan forbearance multiple times, the federal government passed a law in June 2023 barring further payment pauses. A 12-month on-ramping period to ease borrowers back into repayment began on October 1, 2023, and will run through September 2024. 

If you’re interested in moving to a private lender as payments resume, you have the option to refinance federal student loans . However, there is a caveat: You’ll lose access to all federal benefits and protections, and once your loans are refinanced, you can’t undo it. 

In case you’re unsure what that means, here are the main benefits you would forgo by refinancing federal student loans into private student loans: 

• IDR plans : IDR plans base your monthly payment on your income and family size and allow for forgiveness after 20 or 25 years. Private lenders do not offer income-based repayment options. 
• Longer deferment and forbearance programs : Federal loans have longer deferment and forbearance programs than private loans. If you can’t afford your payments even on an IDR plan, you can apply for one of these yearlong programs. You can renew the pause for three years in total. Private lenders will sometimes offer one year of deferment, but some offer as little as six months.
• Loan forgiveness programs : Federal loans come with loan forgiveness options including PSLF and IDR loan forgiveness. If you refinance, you forfeit access to all federal loan forgiveness programs .

If you’re considering refinancing, it’s wise to consider what you might gain versus what you’d be giving up. Saving on interest is excellent, but you don’t want to regret losing loan forgiveness or income-based repayment options later if you decide you need them. 

If you want to transfer Parent PLUS loans

No federal program or option allows transfers of Parent PLUS loans to the child . If you have a Parent PLUS loan you want your child to take over, you have a couple of ways to approach it. 

• Have your child refinance the loan into their name through a private lender. 
• Arrange for the child to make payments to you for the loan balance while leaving the loan with your current servicer. 

Your child must qualify for student loan refinancing based on their credit scores and income for the first option to work. If you cosign to complete the refinancing, that won’t release you from your repayment obligation. It would only transfer the loan to a new lender. 

Another option is for the child to give money to the parent for loan repayment. Any individual may gift another individual up to $18,000 in 2024 without needing to file a gift-tax return. However, if your child is a recent grad just starting their career, that might not be feasible. 

After you refinance or consolidate your student loans, you’ll make payments to the new loans going forward . Assuming the lender handled the payoff accurately, you shouldn’t owe anything on the old loans. 

Here’s a quick checklist to follow after you transfer student loans to another lender or loan servicer.

• Note the due date on the new loan, which may be different from the previous ones.
• Set up automatic payments through your bank to take advantage of rate discounts your lender offers and avoid late payments. 
• Check your annual credit reports to ensure the old loan is marked “paid off.” 

If you see any errors, dispute them with the credit bureau that’s reporting the information. And be sure to cancel any recurring payments you’ve set up from your bank account to the old loans once the transfer is complete. 

Ready to transfer your loans? Comparing the best student loan refinancing companies is a terrific place to start. 

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How to Move Your Student Loans to a Different Lender or Servicer

By Mark Kantrowitz

September 3, 2019

Some borrowers don’t like their current lender or servicer. There are several options for moving their student loans to a different lender or servicer, depending on whether the loans are federal student loans or private student loans.

Lenders and servicers are sometimes different organizations. The lender or holder of a loan is the financial institution that owns the loan. The lender may have originated the loan, or it may have bought the loan from another lender. A servicer is an organization that manages customer service functions, such as billing, collecting payments and answering borrower questions on behalf of the lender. Some lenders service their own loans. Some lenders have multiple servicers.

How to Change the Servicer on a Federal Student Loan

When a borrower obtains a Federal Direct Student Loan, the initial servicer is assigned by the U.S. Department of Education. The U.S. Department of Education may also change a borrower’s servicer occasionally, but the borrower does not get to choose the new servicer.

The assignment of borrowers to servicers is random, to permit comparison of servicer performance. For this reason, the U.S. Department of Education does not let borrowers choose their servicer or switch servicers.

However, there are three ways a borrower can transfer their loans to a different servicer.

• Choose Public Service Loan Forgiveness (PSLF). If a borrower files an employer certification form or applies for public service loan forgiveness, their loans will be transferred to FedLoan Servicing (PHEAA), the servicer that specializes in public service loan forgiveness.
• Apply for Total and Permanent Disability (TPD) Discharge. If a borrower applies for a disability discharge, their loans will be transferred to Nelnet, the servicer that specializes in disability discharge.
• Obtain a Federal Direct Consolidation Loan. If aborrower applies for a Federal Direct Consolidation Loan online at StudentLoans.gov , they can choose the servicer.

Borrowers can also change the lender or servicer on a federal student loan by refinancing the loans into a private student loan.

Keep in mind refinancing federal student loans means a loss in many benefits – income-driven repayment plans, any federal forgiveness programs, generous deferment options, and more.

The final option for getting away from a bad servicer is to pay off the loans in full.

How to Change the Lender of a Private Student Loan

You can’t change the servicers on a private student loan, but you can refinance them (sometimes called a private consolidation) with another lender.

This does not transfer the loan. Instead, the new loan pays off the balance on the old loan.

What Happens When You Change Servicers?

When you change loan servicers, the terms of the student loan do not change. However, the payment process may change:

• The due date may change
• The payment address may change
• The auto-debit payment instructions may need to change

There are also a few pitfalls when you change servicers by obtaining a Federal Direct Consolidation Loan.

• Accrued but unpaid interest is capitalized at loan status changes, including consolidation
• Consolidation resets the clock to zero on loan forgiveness, since loan forgiveness is provided on a per-loan basis, not a per-borrower basis, and consolidation results in a new loan
• Other borrower benefits may be lost when a loan is consolidated, especially when a FFEL program loan is consolidated into a Federal Direct Consolidation Loan

What Happens When You Change Lenders?

When you change lenders by refinancing your student loans into a private consolidation loan, the private consolidation loan is a new loan.

The terms of this loan may be different than the terms of the loans that were refinanced. There may be a new interest rate, a new repayment term and a new monthly payment.

In particular, if you refinance a federal student loan into a private consolidation loan, you will lose the superior repayment benefits of the federal student loans.

If a private student loan is refinanced without a cosigner, it may effectively release a cosigner on the original loan from their obligation to repay the debt.

Warning about Changing Servicers

Sometimes, borrowers seek to change their servicer because of perceived problems with the servicer. However, borrowers should confirm that the problem is a problem with the servicer and not the loan program. Otherwise, a change of servicer will not fix the problem.

For example, servicers of Federal Direct Student Loans do not have the authority to change the interest rate. They also do not have the authority to cancel all or part of the borrower’s debt, except in limited circumstances specified by law (e.g., death and disability discharges, closed school discharges, identity theft, etc.). So, a servicer may be unable to negotiate the terms of the loan or provide financial relief because they are unable to do so, as opposed to unwilling to do so.

Other Options

There are several alternatives to changing the servicer or lender of a loan.

• Call the lender to ask about other solutions, such as changing the repayment plan, changing the due date, or obtaining a deferment or forbearance.
• Apply for student loan forgiveness, such as Teacher Loan Forgiveness or Public Service Loan Forgiveness. If this pays off the debt, the borrower is free from the servicer and lender.
• Pay off the debt early, if you can afford to do so.
• Use a balance transfer check to transfer the loan to a credit card. Usually this is not a good idea, since the interest rates on credit cards are higher than the interest rates on private student loans. Even if you get a 0% introductory rate, the introductory rate will not last. But, perhaps you can afford to pay off the remaining balance before the introductory rate expires.
• Obtain a personal loan from a local bank or credit union. Sometimes these loans may offer a lower interest rate than a private student loan.

Want more advice for dealing with student loan debt?  Sign up for our  free student loan newsletter . And don’t forget to follow us on  Facebook ,  Instagram  and  Twitter .

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Education loan balance transfer.

Get your education loan transferred to IDFC FIRST Bank now, we have everything that you need. With our education loan balance transfer scheme, you can switch your existing high cost education loan to IDFC FIRST Bank, at lower interest rates in a hassle free manner, along with the attractive offers. Read More

Transferring your education loan to IDFC FIRST Bank will reduce your monthly EMI amount & help you save on interest repayments, which can be used to meet other necessities. With IDFC FIRST Bank’s flexible repayment options, you can choose to repay at your convenience & enjoy an extended tenure with no hidden charges involved. Read Less

Benefits with balance transfer to IDFC FIRST Bank

Here are the key benefits, that you will enjoy with your education loan balance transfer to IDFC FIRST Bank:

Transfer your existing education loan at upto 1 % lower ROI*

Loan available upto 1.5 cr., with collateral*, income tax benefits under section 80e, availability of a top-up loan for further studies, an extended tenure with flexible repayment options, 30k+ courses funded globally, across 4000+ universities, faster loan sanction via seamless application process, how does it work.

The process to transfer your education loan to IDFC FIRST Bank is quite straightforward. All you need to ensure is a proper withdrawal of documents from previous financing institution & submit to IDFC FIRST Bank. After the required documents are submitted, the process of education loan balance transfer will be initiated.

You will need a quote from your previous financial institution with below details:

Balance principal amount 

Tenure completed 

Rate of interest 

Sanction Letter / Repayment schedule or Statement of Account

ELIGIBILITY

You must consider certain critical eligibility factors for education loan balance transfer as below*

• The loan transfer should be a 'first-time takeover’, meaning it should be the first occasion when you are applying for your education loan balance transfer
• You must have a good credit score

If you meet above conditions then you are eligible to apply for an education loan balance transfer at IDFC FIRST Bank

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Yes, you can carry out an education loan balance transfer from a Non-Banking Financial Company (NBFC) to IDFC FIRST bank.

Can I avail tax benefits on an education loan?

Yes. Section 80E of the Income Tax Act, 1961 relates to the deduction of interest paid on the education loan from your taxable income in a particular financial year.

What are the key factors that lenders consider for approving an education loan?

A lender considers applicant & co-applicant’s capacity to repay the loan along with students past academic records and reputation of the educational institution the student has applied for.

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There are several advantages in getting your loan transferred to IDFC FIRST Bank.       

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Education Loan Transfer in 2024: Ultimate Guide [Tips Included]

• Shreya Berry
• January 25, 2021
• 12 min read
• Last Updated: September 10, 2024

Table of Contents

It takes 10-15 years or longer to pay off student loans. Over time, you may get frustrated with the lender, the loan terms or the loan servicer, or a combination of all three. It is quite possible to move the existing college loan from one bank to another one and to potentially make financial profits from such a education loan transfer. You will also get a greater amount of credit in addition to lowering the interest rate. Yet you ought to weigh both the pros and cons involved and understand how refinancing student loans work with such a debt swap instead of immediately running into it.

What Is A Education Loan Transfer?

Here’s how an education loan transfer from one bank to another works. Let’s say that you have taken an overseas education loan from NBFC because of their shorter processing period and a year later, you are not happy with their student loan repayment scheme and would like to apply for a student loan refinancing from a public bank. In such a scenario, you may apply for a Education loan transfer from your NBFC to a banking institution.

Types of Education Loan Balance Transfer

The four main types of students education loan transfers or takeovers are listed below:

Secured to secured: If you transfer a secured loan from one secured loan to another secured loan, the new loan will also be secured by collateral. In this scenario, the process will be completed on Xerox papers since you won’t have any collateral originals.

Unsecured to secured: Most people think about getting an unsecured education loan from private banks or NBFCs because of time restrictions or the lack of required collateral papers. Students discover how expensive their loan is when it comes time to repay it. Students can borrow money from government banks at a lower interest rate with collateral security.

Unsecured to unsecured: In the event of an unsecured-to-unsecured transfer, it is more likely that the borrower will take out a loan from an NBFC and then choose to transfer their account to a private bank because of benefits like Section 80E, which will enable them to reduce their tax liability on interest payments.

Secured to unsecured: This is extremely rare since it involves trading lower interest rates for higher interest rates. This typically occurs when the owner of the collateral is ready to sell the asset and pay off the loan.

How To Transfer Federal Student Loan To Another Lender Or Servicer?

Education loan transfer to other banks  involves a specific process. Here are the general steps you can follow:

1. When you finally decide if you wish to move the loan, your old lender can send you a statement on the remaining balance of the loan to be repaid.

2. Following this, the document must be sent to the bank offering the student loan with refinancing.

3. Upon receipt of this statement, the loan process will proceed as normal. Once the loan has been sanctioned, the new bank will send a check to clear all unpaid fees of the previous lender.

The interest rate of takeover loans is often smaller than that of fresh loans which are because the risk factor related to a new bank is very minimal.

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Total interest payable, total payment (principal + interest), eligibility criteria for the transfer of  educational loan.

Eligibility criteria for the transfer of an educational loan can vary depending on the policies of the lending institution or loan servicer. However, here are common factors that lenders may consider when evaluating eligibility for the transfer of an educational loan:

Active Loan Status:

Typically, the loan should be in an active status, meaning that it is not in default or delinquent. Lenders may be less likely to approve a transfer if the borrower has a history of missed payments.

Good Repayment History:

A positive repayment history, with on-time payments and adherence to the agreed-upon repayment plan, can enhance eligibility for a loan transfer. Lenders may review your payment history with the current servicer.

Creditworthiness:

Some lenders may assess the borrower’s creditworthiness before approving a loan transfer. This can include factors such as credit score, employment status, and income. A strong credit profile may increase the likelihood of approval.

The type of educational loan may influence eligibility. Federal student loans, for example, may have specific requirements and protections, and transferring them may involve a different process compared to private student loans.

New Educational Institution Acceptance:

If you are transferring your loan due to a change in educational institutions, you may be required to provide proof of acceptance from the new school. This ensures that the loan is being used for educational purposes.

Documentation:

Lenders typically require documentation to process a loan transfer. This may include an application form, identification documents, proof of enrollment, and any other paperwork specified by the lender.

Loan Amount:

Some lenders may have minimum or maximum loan amount requirements for transfers. Be aware of any limitations on the amount that can be transferred, and ensure that the new loan aligns with these guidelines.

Interest Rates and Terms:

The terms and conditions of the new loan, including interest rates and repayment terms, may influence eligibility. Lenders may assess whether the new loan offers favourable terms compared to the existing one.

You should also see to it that there are no more disbursements that the loan applicant must take from their current lender’s loan. It means that your previous bank has already disbursed whatever loan amount had to be disbursed and the loan applicant can not borrow any more money from the previous loan.

Before you plan to move your education loan, you must keep some things in mind, such as processing costs, interest costs for education loans, and other expenses, to see if your final outflow will be less or more.

What Are The Benefits Of An Education Loan Transfer?

A lender taking over your education loan provides numerous financial benefits. Some of them are listed below-

Low student loan interest rate: If you are switching from a private lender to a government bank, you are in for a treat! The most important takeaway is that the you can transfer educational loan at low interest rate will be significantly lower than it would have been had you continued with your private lender.

Eligibility for government-subsidised education loans: If you are eligible for interest subsidy schemes on education loans under one of several government-funded schemes, you can get it when you switch from a private lender to a government lender. 

The longer repayment period for education loans: Most NBFCs have set a ten-year repayment period for education loans. Students can obtain a total repayment term of 15 years from public banks. Another way to look at it is that the lower the initial EMIs are, the longer the repayment period.

What Should You Be Aware Of During The Transfer Process?  

When transferring a federal student loan to another lender or servicer, it’s crucial to be aware of several factors to ensure a smooth process and avoid potential issues. Here are key considerations:

Check out your final financial outflow: By offering lower EMIs, at a low student loan interest rate and a longer maturity schedule, modern banks aim to draw buyers, which may seem appealing on the face of it, but it may turn out to be more costly in the final analysis. So, determine how much you would potentially pay in both scenarios, and then consider which situation will be more appropriate for you. Experts will advise you to stick with your current bank and pay greater EMIs if you are not too hard-pressed for cash, finish off your loan sooner, even if the interest rate for education loans is higher, and rest easy.

It is important to calculate processing and other fees beforehand: Think how much you are paying out, and what the new bank will charge for a transaction tax, stamp tax, appraisal cost, and legal costs, then balance it against the interest rate cut. If you find that the new education loan in India is still cheaper after taking these items into consideration, then you should go with it, or else stick to the old education loan.

Associated account requirements : If you take out an education loan in India, banks normally require you to open a savings account with them so that they can route your EMIs via it. So, if you intend to transfer student loan to another bank, this aspect would also need to be taken into consideration closing one saving account and opening another with another bank, and the costs it will require.

Relations matter : Personal relationships do matter in banking, as in all other sectors; they will make the operation and procedures simpler. In other words, the simplicity of doing business leads to a great deal of peace of mind. If you transfer student loan to another bank and the workers don’t comply much, it will only raise your problems, mess with your professional job, and make life more complicated in general. So, in those cases, Education loan transfer may not be worth it.

Collateral ratio to outstanding ratio: If you’ve already repaid a substantial part of your loan, don’t give your current bank absolute original collateral. Why would you agree to offer a security that is double the value of your loan outstanding? Instead, you can use it to take an extra loan, if the need emerges. Give a smaller sum of collateral to the current bank. And if the bank also persists on the same matter, bargain more to lower the interest rate.

Some Other Terms and Conditions For the Student Loan Transfer

 If you plan on transferring your current education loan from one bank to another during the Education loan transfer of collateral, the new bank will take over your existing collateral.

You may have to place valuable collateral with a particular public bank if you have an existing non-collateral loan with your current lender and you want to transfer student loan to another bank, which mostly lends collateral-based loans. No loan margin occurs. You will be granted a 100 percent credit on the collateral value by the public bank to which you plan to move the education loan.

If you have used a moratorium on your equalised monthly installments (EMI) and are planning to move your loan to another bank with a lower interest rate, it is possible that your proposal will be denied. On the basis of the credit policies and risk appraisal of the issuer, not all balance Education loan transfer demands submitted by borrowers who applied for a moratorium may be authorised by the creditors. This is because the lender would conclude the borrowers who applied for a moratorium are facing cash flow difficulties. So, until they can persuade shareholders that their cash flow issues have been fixed, it can be tough to get a loan transition completed.

Final Steps When Loan Transfer Is Being Serviced

The final steps when your loan transfer is being serviced involve ensuring a seamless transition and updating your records accordingly. Here’s a guide to the concluding steps:

Confirmation of Transfer:

Confirm with both your current and new loan servicers that the transfer has been completed successfully. Ensure that all relevant details, including your loan balance and repayment terms, have been accurately transferred.

Update Contact Information:

Make sure your contact information is up to date with the new loan servicer. This includes your mailing address, email address, and phone number. This ensures that you receive important notifications and statements.

Set Up Online Account with New Servicer:

If your new loan servicer offers online account management, set up your account. This allows you to access your loan information, make payments, and track your repayment progress conveniently.

Review Repayment Schedule:

Carefully review the repayment schedule provided by the new servicer. Confirm the due dates, amounts, and any changes in your repayment plan. If you have automatic payments set up, ensure they are aligned with the new schedule.

Update Automatic Payments:

If you have automatic payments set up with your bank, update the payment details to reflect the information of the new loan servicer. This helps avoid any disruptions in your payment schedule.

Monitor Loan Status:

Keep a close eye on your loan status with the new servicer. Verify that payments are being applied correctly, and address any discrepancies promptly. This may involve checking your account statements regularly.

Stay Informed about Benefits and Protections:

Confirm that any federal benefits and protections associated with your student loan, such as income-driven repayment plans or loan forgiveness programs, remain intact after the transfer. Seek clarification from the new servicer if needed.

Save Documentation:

Retain all documentation related to the loan transfer, including confirmation notices, communication with both servicers, and any paperwork provided during the process. This documentation may be useful for future reference.

Contact Customer Service for Clarifications:

If you have any questions or concerns, reach out to the customer service of your new loan servicer. They can provide assistance and clarification on any issues you may encounter.

Gradually Adjust to the New Servicer:

Familiarise yourself with the policies and procedures of the new loan servicer. Understand how they handle inquiries, where to find important information, and any additional services they offer.

By completing these final steps, you can ensure a smooth transition between loan servicers and maintain control over your student loan repayment. 

Comparison Between Different Banks For Transfer Of Student Loans

When exploring options to transfer student loans, it’s essential to compare offerings from various banks to find the most suitable terms for your financial needs. The table below provides a comprehensive overview of key criteria such as interest rates, repayment terms, eligibility requirements, and additional features for top financial institutions of India. Consider these factors carefully as you weigh the pros and cons of each bank to make an informed decision.

Can we transfer education loans from one university to another?

Certainly, you can transfer education loans from one university to another, but it’s crucial to inform the bank about the change and submit the required documents. You might be wondering, “If I change universities, do I have to repay any loan amounts?”

In short, no, you won’t be obligated to repay any loan sums if you switch universities. However, to benefit from the latest changes, it’s essential to communicate with the bank.

Ensure you provide the necessary paperwork, including an acceptance letter from the new school, evidence of any scholarships earned, and other documents specified by the bank.

It may, thus, be concluded that an educational loan may be transferred from one bank to another. But there is a need to be aware and to take into consideration all the factors mentioned above before deciding whether to transfer the educational loan or not.

1. Can student loan be transferred?

Yes, you can transfer your education loan to a lender with a lower interest rate, but remember to also consider repayment terms, processing fees, and customer service before deciding.

2. What happens to my student loan if I change university?

You can modify your education loan details, including changing your university, by filling out a form with the new information and submitting it to the bank.

3. Can I take a student loan from 2 different banks?

Yes, you are eligible to obtain a second education loan as long as you meet the necessary requirements. You have the option to choose either the same bank that provided your graduation loan or a different lender for this second loan.

4. Can I transfer my loan account to another bank?

To transfer your loan to a new bank, simply close your loan account with the current lender and pay a transfer fee to the new bank. The new bank will then clear your existing loan, and you can start repaying them through equated monthly instalments at a new rate of interest.

5.  What is balance transfer in an education loan?

Balance transfer in an education loan involves moving an existing loan from one lender to another, often to secure better terms or interest rates.

6. Will my credit score be affected if I transfer my education loan?

Transferring your education loan should not significantly impact your credit score, as it’s considered a standard financial activity. However, maintaining regular payments and a positive credit history during and after the transfer is crucial to preserve or improve your credit score.

7. Will I be charged a penalty if I transfer my education loan before the end of the repayment period?

Penalties for transferring an education loan before the end of the repayment period depend on the terms set by the specific lender. Some lenders may charge a prepayment penalty or processing fees, while others may not.

8. Can I transfer my education loan if I have defaulted on payments?

Ans: Transferring an education loan while in default may be challenging, as lenders typically assess the borrower’s creditworthiness and repayment history. It’s advisable to first address the default by working with the current lender to establish a repayment plan.

9. Can I transfer my education loan to a lender that offers a lower interest rate?

Yes, you can transfer your education loan to a lender offering a lower interest rate through a process known as loan refinancing or balance transfer.

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Managing your student loans can come with a learning curve, and navigating your servicer’s website may take some getting used to. That said, there is a chance that at some point during repayment, your loans will be transferred or bought out by a new servicer.

The Consumer Financial Protection Bureau (CFPB) estimates that as many as 40 percent of student borrowers will resume loan payments this year with a different servicer than they had at the start of the pandemic payment pause. Being prepared for this change and understanding a bit about what a new servicer will mean for you can help you to stay organized and stress-free during the transition.

Why are my student loans being transferred to a new servicer?

A loan might be transferred to a new servicer for several reasons:

• Private loans may be bought out by another company.
• Federal loans may be transferred by the U.S. Department of Education from one member of its servicing team to another.
• Your federal loan servicer’s contract may end with the U.S. Department of Education, resulting in a transfer.
• Your loans may be transferred if you sign up for a loan forgiveness program such as Public Service Loan Forgiveness (PSLF) or a TEACH Grant.

Federal student loan servicing changes

At the end of 2021, the Department of Education announced that it had adopted new standards for the companies servicing student loans in an effort to raise the level of service borrowers receive. This is part of a broader effort from the Education Department to improve resources and communication around federal student loan repayment.

As part of this process, there’s been a large turnover in student loan servicers contracted with the federal government. Servicers that have transitioned out include:

• Granite State Management & Resources: As of the end of 2021, all federal loans serviced by Granite State have been transferred to Edfinancial Services .
• Navient: As of the end of 2021, all federal student loans serviced by Navient have been transferred to Aidvantage.
• FedLoan (Pennsylvania Higher Education Assistance Agency): The Department of Education is in the process of transferring all federal loans serviced by FedLoan to MOHELA , Aidvantage, Edfinancial Services and Nelnet . All borrowers who are pursuing Public Service Loan Forgiveness will be transferred to MOHELA.

Other transitions underway include:

• Oklahoma Student Loan Authority (OSLA) loans are being transitioned to Aidvantage.
• Great Lakes Educational Loan Services, Inc. is transferring borrowers to Nelnet.
• Edfinancial is not transferring loans to a new servicer, but the company is in the process of changing its servicing platform.

Combined, more than 10 million borrowers are expected to have their loans transferred as a result of these changes.

What happens when your student loans get transferred?

When your loan servicer gets bought or your loans are transferred, you will receive a notice from your current student loan servicer and a welcome letter from your new servicer. The promissory note that you sign for each new student loan requires both the old and the new servicer to notify you of the change. You should receive a letter from each of them when there is a servicer transfer. You may also receive notice from the Department of Education if your federal student loans are being transferred.

While loan terms won’t change if your student loan servicer changes, it can lead to a confusing shuffling of funds, some of which take borrowers by surprise. You will see a different servicer on your credit reports, and you’ll need to familiarize yourself with different customer support. The new servicer may also have a different website or payment plan options. The new servicer should communicate any significant changes in the welcome letter.

What to know about federal vs. private student loan servicers

Federal student loan servicers and private student loan servicers can both be transferred, and both must follow specific guidelines to notify you about the changes.

Change in a federal student loan servicer

Your federal student loan servicer could change for a few reasons. For one, you may experience a change because the U.S. Department of Education ended its contract with your servicer, as is the case with Granite State, Navient and FedLoan.

You will also experience a servicer change if you sign up for Public Service Loan Forgiveness (PSLF) . Right now, the U.S. Department of Education has only one servicer that manages accounts enrolled in the PSLF program. So if you sign up for this program or others like it, you may get a new student loan servicer. You will also get a new servicer if you take out a Direct Consolidation Loan , though in this case, you will be able to choose your preferred servicer.

Change in private student loan servicer

You may experience a change in your private student loan servicer, as well. This often happens when a loan servicer is sold or when a private student loan company goes out of business.

For instance, Wells Fargo exited the student loan business in 2021, and all existing loans were transferred to Firstmark Services .

What should I be aware of during the transfer process?

Consumers don’t have any “rights” when it comes to their loan servicers getting bought, says student loan expert Mark Kantrowitz. He offers the following advice to help the transition go smoothly.

Autopay might not transfer to the new servicer

If you have your monthly payments automatically taken out of your bank account, you will likely need to reenroll in the service once the transition is complete.

Doing so is crucial — most servicers don’t inherit your past authorization and require a new one. If you don’t re-enroll, you might go months without making a payment on your loans, which could result in them defaulting. Plus, automatic payments are usually the key to getting a discount on your interest rate, so your rate could rise if you don’t reinstate autopay.

Some features might disappear

If you’ve consolidated your loans with another company, you might lose some enticing features, like automatic biweekly payments instead of monthly payments.

If you set up something similar with your new servicer, specify where you want your extra payment to be going. Some servicers might not automatically put it toward interest.

Just because your account says ‘$0’ doesn’t mean your loans have magically disappeared

While it would be a welcomed miracle for an entire balance to “get lost” in the transition, it’s highly unlikely that will happen.

Some student loan holders log in to their accounts and see a balance of $0, as well as expected payments of $0, as close as a week before the payment due date. However, even so, you’ll need to continue making payments regularly to avoid defaulting.

Be proactive about any repayment or forgiveness plans you were previously on

With any data transfer, things can get lost along the way. This can be detrimental if you’re on a loan forgiveness program, like income-driven repayment , where each month’s payment counts toward your loans being erased.

Once the transfer is complete, call the new servicer to confirm your plan.

Make copies of your account balance, monthly payment and schedule

Kantrowitz stresses the importance of keeping records of your loan details. He recommends making printouts of your loan balances, as well as your monthly payment amounts, before and after the transition.

By keeping track of how much you owe and what your payments are, you can avoid any mix-ups turning into costly interest payments.

“You need to pay attention,” Kantrowitz says. “You need to stay on top of things because if they somehow lose your paperwork during the transition, it will manifest itself in the future.”

If you find yourself among those whose loan servicer is being transferred, know that you can manage the transition with a few simple steps:

• Confirm your new servicer. You should receive a notification from your old servicer and a welcome letter from your new servicer if your loans are transferred. If you don’t receive a welcome letter, reach out to the old servicer to find out who the new servicer is. You can also look up your federal student loan servicer in the National Student Loan Data System (NSLDS).
• Set up automatic payments. If you had an automatic payment set up with your old servicer, it won’t transfer over to the new one. If you’d like to continue (or start) using autopay, use the new loan servicer’s site to set up your preferences.
• Explore your new servicer’s website and processes. All loan servicers have the same set of guidelines they need to follow for managing your student loans. However, they may handle the loans or process payments differently from your previous loan servicer. Spend time getting to know the details of your new servicer to make sure that everything is set up right for your needs.

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Federal student loans can become private loans via refinancing. But there’s no way to transfer private student loans to federal. Borrowers who refinance federal student loans into private loans cannot undo this move and should understand its risks.

Can you combine federal and private student loans?

You can combine federal and private student loans, but only as a new private loan. This is done by a process known as student loan refinancing . Refinance lenders pay off your original loans — either federal or private — and replace them with a new private loan with new terms.

Some private lenders call their refinance products “consolidation” loans. These are not part of the federal student loan consolidation program, though. That program lets you combine multiple federal student loans into a single federal loan. You cannot include private loans in a federal consolidation loan.

» MORE: Compare student loan consolidation and refinancing

Federal loan benefits and private loans

Private loans may offer lower interest rates than federal loans, depending on your credit and financial situation. But they do not have as many repayment options or protections as federal loans do, such as:

Loan forgiveness. Borrowers can have their federal student loans forgiven, discharged or canceled in certain situations, such as working for an eligible public service employer or becoming totally and permanently disabled.

Income-driven repayment. Borrowers who can’t afford their loans can enroll in plans that set monthly payments as a percentage of their income. Income-driven plans forgive remaining balances after 20 or 25 years, though that amount is taxable.

Guaranteed postponement. If you’re unemployed or facing an economic hardship, you are entitled to pause repayment via a student loan deferment provided you meet its requirements. These postponements often can last up to three years.

You can’t transfer private student loans to the federal government to access these options. But if you want features like them, you may be able to refinance your loans with a private lender that offers flexible repayment options.

» MORE: Best student loan refinance companies

The best reason to refinance student loans is to save money . If you transfer private loans to a different lender to gain a repayment feature, don’t pay more as a result.

How to consolidate private and federal loans

The only way to consolidate federal and private loans is with a private student loan refinance lender. You can’t combine these loans through the government.

» MORE: How to refinance student loans in 7 steps

Before consolidating federal and private loans, make sure you don't need the benefits listed above or won’t qualify for programs like Public Service Loan Forgiveness . If refinancing all of your loans together is right for you, compare rates from multiple private lenders to find the best deal.

Estimate how much you could save by refinancing

Note: This calculator assumes that after you refinance, you’ll make minimum monthly payments.

Step 4 : Compare NerdWallet's top-rated student loan refi lenders .

On a similar note...

Can you transfer your student loan from one bank to another?

A balance transfer is a process of transferring high-interest debt from one account to another bank account with a considerably lower interest rate. Various parameters need to be considered before you apply for an Education loan balance transfer.

Eligibility Criteria

The loan must be a first-time takeover.

The loan requires to be fully disbursed at the time of take-over.

Repayment should have been started and the borrower must have a good CIBIL score.

Know about the processing fees and other related charges before you apply for the Education loan transfer from one bank to another. For some banks charge processing fees while others don’t. Depending upon the number of charges required overall, consider if the transfer would be a net benefit or net loss.

Collateral to the outstanding ratio:

In case you have already paid back the majority of the loan amount don’t offer the original collateral to the bank. Instead, offer your new bank a lesser amount of collateral and utilize the higher amount collateral to take up another loan.

Read all the terms and conditions of the bank before finalizing the loan transfer.

While the new bank will attract you with an extra-low annual percentage rate (APR) sometimes as low as zero per cent, do not fall prey to such schemes as the promotional offer may not last until the end of your repayment period.

The transfer of student loans to another lender can be beneficial because of the reduced rate of interest from the new bank but be aware of the pros and cons of loan transfer as you might end up saving money from the reduced interest rate but the bank might charge rates in the form of processing fees or other allied charges for the transfer. Consider studying the recent trends of loan transfer to avoid falling prey to interesting interest schemes.

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How to transfer an education loan?

The process of transferring an abroad education loan from one school or program to another and when it might be necessary to do so .

You must thoroughly examine a loan provider’s terms and conditions for loans for international education before choosing them.

But what if you wind up taking out an education loan from a lender with extremely high interest rates, whose loan repayment terms are inconvenient for you, or if you wish to switch schools or programs?

If you find yourself in such a circumstance, there is a solution that you may learn about by reading this article.

Can I transfer my education loan from one bank to another

Eligibility criteria for education loan transfer, process of education loan transfer, other terms and conditions for education loan transfer, can we transfer education loans from one university to another, how long will it take for the bank to approve my request to switch universities, which bank is best for education loans abroad .

• Moving high-interest debt from one lender to another with a much lower interest rate and better repayment terms is an education loan transfer.
• Lenders, in this case, include banks and NBFCs. Banks like SBI, Union Bank, and Bank of Baroda offer takeover loan programs to transfer student loans.
• You may effortlessly switch your expensive education loan to SBI through the takeover loan program to lower monthly EMIs. The highest loan limit for this is INR 1.5 crores, with no processing cost.

3 Steps on how Education Loan works?

Only if the loan applicant meets the following requirements may they apply for an education loan transfer:

• There should be no more loan disbursements from the existing lender for the applicant. It indicates that no more money may be borrowed from that lender because the disbursements have already been made.
• The borrower’s CIBIL score and the repayment of the previous loan must have begun in the form of EMIs. Go here to learn more about the CIBIL score.
• The financing has to be a new takeover.

Applying for Education Loans

• Your former lender will offer you a statement regarding the outstanding loan amount that has to be repaid after you decide to transfer your loan.
• The bank offering the student loan refinancing must then get the presented statement.
• After receipt of this statement, the loan application procedure will start as usual. When the loan has been approved, the new bank will send a check to pay off any outstanding debts owed to the previous lender.
• Because the risk component connected with the new bank is relatively minimal, takeover loans always have lower interest rates than new loans.

• The new bank will take over the current collateral if you move an education loan with collateral.
• In contrast, if you want to move a non-collateral loan to a public bank that typically provides loans based on collateral, you will need to provide the specific public bank with valuable collateral. The collateral will secure no loan margin and a 100% loan amount.
• Because of the lower interest rates and better repayment options, moving student loans from one bank to another is usually advantageous. Nonetheless, to prevent any losses, think about researching previous patterns in loan transfers before making the decision.

Certainly, but you must inform the bank about the change and provide the necessary paperwork. You could now wonder, “If I switch universities, would I have to refund any loan amounts?”.

The short answer is no. You won’t be required to repay any loan sums if you switch universities. But, to take advantage of the most current modifications, you must speak with the bank.

You must also present the necessary paperwork, including a letter of acceptance from the new school, proof of any scholarships you may have earned, and other records specified by the bank.

Depending on the bank’s internal procedures and the intricacy of your request, the time it takes to accept your request to move universities may change.

It is advised that you contact your bank as soon as possible to establish a rough schedule.

Finding the best bank for school loan programs might take a lot of work because so many banks provide these loans. Following are the best banks and education loans to study abroad:

• The State Bank of India: SBI Global Ed-Vantage Scheme
• The Bank of Baroda: Baroda Scholar Scheme
• The Punjab National Bank: PNB Udaan Scheme
• Canara Bank: IBA Model Loan Product For Higher Studies Abroad

There is no such thing as a sure thing, and during your time studying abroad, you can decide that you want to switch colleges or countries after your loan has been approved and occasionally disbursed. You won’t need to worry about the changes afterward.

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Table of content

What is an education loan transfer, types of education loan transfer, what is the process of education loan takeover, what are the eligibility criteria for an education loan transfer, documents required for education loan transfer, what are the benefits of an education loan transfer, other terms and conditions for education loan transfer, can we transfer education loans from one university to another, benefits of doing the loan transfer via wemakescholars.

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While deciding on a loan provider, it is very important that you conduct thorough research on their terms and conditions regarding education loans abroad. 

But what if you end up borrowing an education loan from a lender whose interest rates are very high or whose education loan repayment policies are not convenient for you? If you are stuck in such a situation, don't worry because there is a way out. You can transfer your education loan from one bank to another, this process is known as an education loan transfer or education loan takeover.

This article aims to give you complete information about an education loan transfer or takeover and when you should consider switching your  education loan lender.

Education loan transfer includes an extended process of transferring debt from one bank to another. Most students prefer education loan transfer from one bank to another because of the higher interest rates, unfriendly repayment policy of the bank, etc. 

Note: The minimum loan balance required to transfer an education loan from one bank to another is 10 lakh rupees. Banks won't prefer to take up your case if it's anything less than that because they won't benefit from the transfer.

There are basically 4 types of Education Loan transfers/takeovers:

• Loan transfer from secured to secured type of loan : In case of secured to secured loan transfer, wherein your existing loan is with collateral, the new loan will also have a  collateral security. In such case, you will not have collateral originals and hence the process will be done on xerox papers.
• Loan transfer from unsecured to secured type of loan : Either due to time constraints or unavailability of mandatory collateral papers, most people consider an unsecured education loan from private banks or NBFCs . During the time of repayment, students realize their loan is very costly. With collateral security, students get a lower rate of interest in Government Banks.
• Loan transfer from unsecured to unsecured type of loan : In the case of unsecured to unsecured transfer, it is more likely to take a loan from NBFCs and they prefer moving to a private bank because of the certain benefits like 80E, which will help them save tax on the interest .
• Loan transfer from secured to unsecured type of loan : This is very rare as this includes giving upon lower interest rates for higher interest rates. This happens mostly when the collateral owner is willing to sell off the property and get released from the loan. 

Here’s how an education loan transfer from one bank to another works. Let’s assume that you took an abroad education loan from an NBFC because of their shorter processing time and later on you are not satisfied with their education loan repayment policy and would like to opt for a student loan refinance from a public bank.

In such a situation, you may apply for an education loan transfer from your NBFC to a nationalized bank. Here’s how it can be done.

• Once you decide to opt for an education loan transfer, your old lender gives you a statement of the pending loan amount to be repaid.
• This statement has to be submitted to the bank providing the student loan refinance.
• Once the new bank receives this statement, they begin your education loan process as usual.
• Once your loan is sanctioned, the new bank issues a cheque with which you can clear your pending dues with your former lender.

It is to be noted that when an unsecured education loan from a private lender is being transferred to a public bank, the collateral must be pledged if the loan amount that is being transferred is more than 7.5 lakhs. 

Note: You can use Loan takeover calculator for a detailed understanding of your case.  

A loan applicant may opt for an education loan transfer from one bank to another only when-

Primary conditions:

• There are no more disbursements to be taken from their current lender, i.e students cannot demand any more disbursements on the remaining loan amount or borrow any money from the old lender.
• Repayment of your old loan must be started in the form of EMI and should be regular to avoid a low CIBIL score in the future.

Other terms

• As per the bank-laid norms, if your current loan is collateral-based, the new bank will take over your collateral under possession until the loan is repaid completely with interest.
• As per the bank-laid norms, if your loan is unsecured and you are transferring it to a Government Bank, you would need to arrange valuable collateral securities to get the loan against it. There will be no loan margin as the new bank will pay off the pending dues to your old bank and the loan amount on that collateral will be 100%.

The rest of the terms and conditions are similar to those of a regular abroad education loan. If you are still facing any doubt regarding your eligibility for a takeover loan, Please feel free to request our financial team for a callback, as our team has special expertise in processing huge volumes of education loan transfers. Our team will respond at the earliest.

• Completely filled-in Loan Application Form
• 2 passport size photographs
• PAN Card of the student and Parent/ Guardian / other co-borrower
• Aadhaar Card of the student and Parent/ Guardian/ other co-borrower
• Proof of Identity (Driving Licence/Passport/Aadhaar/ any other acceptable photo identity as per KYC norms)
• Proof of Residence (Driving Licence/Passport/Electricity bill/Telephone bill)
• bank account statement of the Student/Co-borrower/Guarantor,for the last 6 months
• IT return/ IT assessment order, pertaining to previous 2 years, of Parent/ Guardian/ other co-borrower (if IT Payee)
• Brief statement of assets & liabilities of Parent/ Guardian/ other co-borrower
• Proof of Income (i.e. salary slips/ Form 16) of Parent/ Guardian/ other co-borrower
• Photo ID proof
• Proof of residence
• Passport sized photograph
• Proof of admission
• Fee structure document
• Salary slips of experienced candidates
• Academic documents

Co-applicant

• Income related documents

Collateral documents

• Property documents
• FD documents

A takeover of your education loan by another lender brings with it a lot of financial benefits. 

• Lesser interest rates: If you are switching to a government bank from a private lender, you are in for a treat! The biggest takeaway is that your education loan interest rate will be considerably lower than what would have been had you chosen to continue with your private lender.
• Eligibility for education loan subsidy under government schemes: If you qualify for an education loan interest subsidy under several government schemes, you can avail it when you switch your lender from a private one to a government lender. Watch the 13th episode of the YouTube web series, Loanflix to get a deeper understanding of these schemes.
• Longer education loan repayment tenure: Most NBFCs have limited the education loan repayment tenure to ten years. Public banks allow students to avail of a total of 15 years as repayment tenure. The other way to look at it is that the longer the repayment period, the thinner the initial EMIs.

• If you transfer an education loan along with collateral, the new bank will replace the existing collateral.
• On the other hand, if you are looking to transfer non-collateral loans to a particular public bank that usually offers loans on the basis of collateral, you will have to provide valuable collateral to that specific public bank. The collateral will not be secured by any loan margin and the loan amount will be 100%.
• Moving student loans from bank to bank is often beneficial due to low interest rates and improved repayment options. However, to avoid losses, consider looking into past loan transfer trends before making a decision.

Yes, but you need to let the bank know and submit the relevant documents. Now you may be wondering, “Will I have to pay back the loan amounts if I change universities?” Well, the short answer is no, you won’t have to pay back any loan amounts if you change universities. However, to benefit from the most recent changes, you need to talk to your bank. In addition, you need to submit the relevant documents, such as the letter of acceptance from your new school, any scholarships you have won, and any other records specified by your bank.

How long will it take for the bank to approve my request to switch universities?

Depending on your bank's internal processes and the complexity of your case, the amount of time it will take to approve your request to transfer universities may vary. Contact your bank early to get a rough estimate.

• Zero-Processing Fee: For the loan takeover cases, WeMakeScholars has secured approval from all the banks and NBFCs for the Zero Processing Fee. This means if you transfer your loan via WemakeScholars either there is no processing fee or it is 100% refundable.
• Complete assistance for students abroad: In most situations, students studying abroad seek an education loan transfer in India. Applying via WeMakeScholars can help students connect with our financial officers via WhatsApp calls or through other digital modes as well. The candidate’s parents will be allowed to carry out further documentation if in India and will receive assistance from the student's dedicated financial officer at each and every step. In cases where the candidate and the candidate’s parents are both abroad, the process can be done by involving a local guardian.
• No Pre-Payment Penalty: There will be no pre-payment penalty at any of the banks. This means that even if you procure a bulk payment and ought to close the loan on an immediate basis or within 6 months, there will be no charges for pre-closing the loan. Along with providing support for regular overseas education loans, our financial officers also help you with student loan transfers. Our team has processed close to 20,000 student loan applications in the past year. No one in the market has as much expertise as our team in the market, due to the large number of loan applications processed by us.

Our team's expertise is built on the knowledge acquired from processing huge volumes of education loan applications every year. So, if you are someone who is stuck with the wrong lender who is charging you a bomb in the name of interest, do approach our team to help you get an education loan transferred to a bank that charges a lower interest rate.

We hope this article helps you solve your doubts regarding education loan transfers. For any further assistance, feel free to contact the financial team at WeMakeScholars . 

Will my credit score be affected if I transfer my education loan?

Will I be charged a penalty if I transfer my education loan before the end of the repayment period?

Can I transfer my education loan if I have defaulted on payments?

Can I transfer my education loan to a lender that offers a lower interest rate?

Our Education Loan team will help you with any questions

Kindly login to comment and ask your questions about All you need to know about Education Loan Transfer in India

Himanshu Bohra

Harish Dammannagari

Hello Himanshu,

The team has already attempted to reach you, but there was no response. Please make yourself available to take their calls so that you can discuss this matter further. I've notified the team again, and you can expect a call from them by tomorrow.

Hi Himanshu,

Transferring your education loan from Avanse to a government bank in India is indeed possible, but it involves specific terms and conditions. We suggest reaching out to our support team to get detailed information and guidance on the formalities required before proceeding further. We have notified our support team, and they will contact you soon to discuss the concern and assist you better.

Manthan Bhadreshbhai Patel

Hello Manthan Patel,

I advise you to contact the support team and discuss the matter with them. They are the ones who will assist you in the process.

Shubham Agrawal

Sneha Krishna

Hi Shubham,

Oh yes! we will help you with the loan transfer. I will connect you with our Expert. He will soon connect with you and discuss the possibility. 

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• Transferring Mortgages & Car Loans
• Having a Co-Signer or Guarantor
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How Do People Use Personal Loans?

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• Personal Loans

Can Personal Loans Be Transferred to Another Person?

Not usually, but there are exceptions

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Generally, personal loans cannot be transferred to another person because these loans are determined based on your credit score and list of available sources of income. Some types of personal loans, such as  signature loans , require your signature and use your promise to pay as collateral. There are rare exceptions to this rule, such as certain car loans and home mortgages.

Key Takeaways

• In most cases, you cannot transfer a personal loan to another person.
• If your loan has a co-signer or guarantor, that person becomes responsible for the debt if you default on the loan.
• Defaulting on a personal loan is seriously damaging to your credit score.
• Car loans and mortgages can be transferred to another person under certain circumstances.

Transferring Mortgages and Car Loans

Mortgages and car loans are unlike other types of personal loans in that they can be transferred. However, they can only be transferred to another borrower under certain circumstances. For one thing, the new borrower must be able to qualify for the loan. If it’s a mortgage, they will need to requalify, which means having a credit score equal to or greater than the original borrower’s.

A transferrable mortgage must be assumable , which means that the loan agreement allows for the debt to be transferred to another person. Not all mortgages meet this criterion; in fact, such mortgages are rare. However, a new borrower can start over with a brand new mortgage, which the new borrower would use to pay off your mortgage. They would then have a lower mortgage payment and potentially a shorter repayment period.

It is somewhat easier to transfer a car loan to another person, either with the same lender or a new one. If the new borrower can qualify for the car loan, the lender may agree to transfer the loan into their name. However, the new borrower may prefer to get a new car loan from another lender. The new lender will pay off your car loan, and the new borrower will benefit from lower payments and a shorter repayment period.

While you cannot transfer most personal loans to another person, some types are transferrable in certain situations.

What Happens When You Have a Co-Signer or Guarantor?

Although a borrower cannot transfer the responsibility of a personal loan, another person can become liable for the remaining balance of someone's personal loan when they take out the loan with a co-signer or guarantor . If you default on the loan, you make the co-signer or guarantor liable for unpaid balances.

Co-signers are every bit as legally responsible for the personal loan as the person to whom the loan is issued. While lenders need to prove they pursued the primary borrower extensively before contacting the guarantor, said guarantor is still responsible for any unpaid balances.

What Happens if You Do Not Repay a Personal Loan?

When you do not pay back a personal loan, particularly a signature loan, your credit score takes a major hit . Your lender can send the loan to a collection agency, which will make your life very stressful, and report your default to the three credit bureaus: Experian, Equifax, and TransUnion.

A loan default stays on your credit score for seven years after the final payment date. To prevent long repayment periods, a lender can include a  set-off clause  in the personal loan contract. A set-off clause allows the lender to seize your funds from a specific bank account.

In order to mitigate the risk of defaulting on a loan, it's important to know exactly what you can afford to pay back before you agree to anything. A personal loan calculator is an excellent tool for determining what the monthly payment and total interest should be for the amount you intend to borrow.

Investopedia commissioned a national survey of 962 U.S. adults between Aug. 14, 2023, to Sept. 15, 2023, who had taken out a personal loan to learn how they used their loan proceeds and how they might use future personal loans. Debt consolidation was the most common reason people borrowed money , followed by home improvement and other large expenditures.

Are All Mortgages Transferrable?

No. To transfer your mortgage, it must be assumable. To be assumable, the mortgage must allow the debt to be transferred to another person and the other person must be able to qualify for the mortgage on their own credit.

What Happens to My Personal Loan When I Die?

If you die with a personal loan, the debt is transferred to your estate, which will then have to pay your creditors. The only way the debt is not paid is if nothing is left after the total estate has been liquidated. The debt does not pass on to descendants and relatives.

How Long Will My Personal Loan Default Stay on my Credit Report?

Defaulted loans typically stay on a credit report for seven years.

Most personal loans cannot be transferred to someone else. There are rare exceptions to this rule, such as mortgages and car loans, but even then, it is easier to qualify for a new mortgage or car loan to pay off the existing loan. If considering a personal loan, make sure you can repay the loan in full.

USA.gov. " Credit Issues ."

Federal Trade Commission. " The Real Estate Marketplace Glossary: How to Talk the Talk ," Page 2.

Federal Trade Commission. " Cosigning a Loan FAQs ."

Equifax. " What Happens if I Default on a Loan or Credit Card Debt? "

Consumer Financial Protection Bureau. " Does a Person's Debt Go Away When They Die? "

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Can I take two education loans from two different banks in India?

Last Updated : April 28, 2020, 11:17 p.m.

Yes, you can get 2 education loans from 2 different banks in Indian but for different courses. As banks disburse the loan directly to the college or university and not in your savings account, the loan from 2 different banks for the same course is nothing but impossible. Banks while disbursing the loan checks the credit profile of the applicant. While checking the profile, they could easily see the loan you might have taken for the said course, thereby leading to the rejection of the second loan application for the same course.

What you can do though is a balance transfer from your existing lender to the new lender if the latter offers you the facility at a lower rate of interest by the time you will be paying the loan. This will help reduce your EMI and interest payments over time. But the existing lender won’t allow balance transfer before specific periods of repayment. Plus, you could be levied a balance transfer fee. So, factor in all and decide whether to go for a balance transfer. Meanwhile, you can check the benefits of education loan balance transfer in this post.

How Much Can You Save on a Balance Transfer of Education Loan?

Suppose, the existing education loan runs at an interest rate of 13.00% on your borrowed amount. But if you get a balance transfer offer from another lender at a lower rate of 13%, how much can you save from the transaction?

List of Banks Where You Should Look to Transfer Your Education Loan

If you don’t get the education loan from any of these banks, you can at least get the balance transferred to them. These lenders will do a credit appraisal to see how you have been paying your EMIs. They would like to see a timely payment track. If that is ensured, you will most likely have a good credit score of 750 and above.

Security on the Loan Transfer

The borrower will need to submit the mortgaged property, FD, or insurance to the new bank after the loan closure from the bank. Because if your loan is above INR 7.5 lakh bank requires a security deposit. And the collateral is necessary to provide to the bank to approve the loan. The list of documents required for the loan transfer is mentioned below.

• KYC proof such as Aadhar, Voter ID card, passport, etc.
• Academic details like 10+2 mark sheet, admission letter and fee structure for the course
• If the student course is completed, provide the copy of the result, mark sheet or certificate
• Bank statement for the last 6 months

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CFPB Bans Navient from Federal Student Loan Servicing and Orders the Company to Pay $120 Million for Wide-Ranging Student Lending Failures

Order would put an end to Navient’s years of abuse of students and taxpayers in the federal student loan program

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) filed a proposed order against the student loan servicer Navient for its years of failures and lawbreaking. If entered by the court, the proposed order would permanently ban the company from servicing federal Direct Loans and would forbid the company from directly servicing or acquiring most loans under the Federal Family Education Loan Program . These bans would largely remove Navient from a market where it, among other illegal actions, steered numerous student loan borrowers into costly repayment options. Navient also illegally deprived student borrowers of opportunities to enroll in more affordable income-driven repayment plans and forced them to pay much more than they should have. Under the terms of the order, Navient would have to pay a $20 million penalty and provide $100 million in redress for harmed borrowers.

“For years, Navient’s top executives profited handsomely by exploiting students and taxpayers,” said CFPB Director Rohit Chopra. “By banning the notorious student loan giant from federal student loan servicing and ensuring the winddown of these operations, the CFPB will finally put an end to the years of abuse.”

“I applaud the CFPB for obtaining concrete relief for borrowers and deterring similar failures in the future,” said U.S. Under Secretary of Education James Kvaal. “Today’s action builds on the Biden-Harris Administration’s work to hold loan servicers accountable and protect borrowers, including more than 1 million borrowers who have received debt relief by fixing past failures to properly track progress toward forgiveness, such as correcting harms from forbearance steering.”

The CFPB’s investigation of Navient kicked off a series of efforts by state and federal agencies to examine forbearance steering and other breakdowns in the income-driven repayment program. Those efforts have resulted in more than $50 billion in debt relief for more than 1 million borrowers who were wrongly steered into forbearance, as well as those who had payments miscounted. Today’s order complements actions already taken by the Department of Education and state attorneys general to provide redress to borrowers harmed by Navient.

Navient (NASDAQ: NAVI) is headquartered in Herndon, Virginia, and was formerly known as Sallie Mae. At the time of the CFPB’s lawsuit in 2017, Navient was the largest student loan servicer in the United States. It serviced student loans of more than 12 million borrowers, including more than 6 million accounts under its contract with the Department of Education. Altogether, it serviced more than $300 billion in federal and private student loans. During the period covering the CFPB’s lawsuit, the company was led by CEO Jack Remondi. Remondi orchestrated the launch of Navient out of Sallie Mae. Since the launch of Navient, the company’s performance has lagged others in the industry. Last year, Navient’s board of directors replaced Remondi and began to transition the company away from its sordid history.

The CFPB sued Navient for failing borrowers at every stage of repayment. The lawsuit alleges that Navient steered borrowers who may have qualified for income-driven repayment plans into forbearance instead. This practice was cheaper and simpler for Navient, but detrimental to borrowers. By steering struggling borrowers into forbearance – where interest continues to accrue and capitalize – Navient’s illegal actions led numerous borrowers to pay additional interest charges.

Navient is a repeat offender with a long history of regulatory violations. After a referral from the CFPB, in 2014, the Department of Justice and the Federal Deposit Insurance Corporation ordered Navient and its predecessor, Sallie Mae, to pay almost $100 million for illegally overcharging nearly 78,000 servicemembers. In 2021, the Department of Education ordered Navient to return more than $22 million in overcharges. In 2022, 39 state attorneys general announced a $1.85 billion settlement with Navient for originating predatory student loans in addition to its forbearance steering practices.

In 2021, Navient’s contract with the Department of Education to service Direct Loans finally ended. Navient announced in early 2024 that it intended to transfer the servicing of its remaining loans to another servicer. The CFPB’s order would ensure that Navient can never harm federal student loan borrowers at scale by getting back into the business of directly servicing federal student loans or growing its Federal Family Education Loan Program loan portfolio.

Navient violated the Consumer Financial Protection Act, the Fair Credit Reporting Act, and the Fair Debt Collection Practices Act. In addition to its unlawful steering activities, the CFPB alleges Navient harmed student loan borrowers by:

• Misleading borrowers about income-driven repayment plans: Navient failed to adequately notify borrowers who enrolled in income-driven repayment plans about the requirement to annually recertify their enrollment. Borrowers were not properly notified that submitting an incorrect or incomplete application to recertify their enrollment could lead to an increase in their monthly payments and delay loan cancellation.
• Botching payment processing: Many borrowers had multiple student loans with varying interest rates and monthly payments. When borrowers made payments meant to cover multiple loans, Navient misallocated payments. Navient also misapplied payments made to a particular loan. These errors resulted in late fees, interest accrual, and negative credit reporting.
• Harming the credit of disabled borrowers, including severely injured veterans: Navient tarnished the credit reports of borrowers who had received a discharge on their federal student loans due to a total and permanent disability.
• Deceiving borrowers about Navient’s requirements for cosigner release: Navient made representations to private loan borrowers that if they paid down their loans in a certain way, they could apply for their cosigners to be released. But Navient did not honor those representations for some borrowers.
• Misleading borrowers about improving credit scores and the consequences of federal student loan rehabilitation: For federal student loan borrowers whose loans went into default, Navient’s debt collection arm promised credit reporting relief to borrowers if they completed a rehabilitation program. Navient failed to deliver on all of the promised relief.

Enforcement Action

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial protection laws, including engaging in unfair, deceptive, or abusive acts or practices.

If entered by the court, the CFPB’s order bans Navient from most federal student loan activities. Navient would no longer be able to service federal Direct Loans and, with certain limited exceptions, no longer be able to acquire Federal Family Education Loan Program loans. Navient would also be banned from conducting consumer-facing servicing activities for the Federal Family Education Loan Program. Where Navient is the master servicer for any remaining Federal Family Education Loan Program loans, the order requires Navient to take a series of steps to help ensure borrowers’ rights are protected, including the right to enroll in more affordable repayment plans.

The order also requires Navient to:

• Pay $100 million redress to consumers: Navient will be required to provide $100 million in redress for affected consumers.
• Pay a $20 million penalty: Navient will pay $20 million into the CFPB’s victims relief fund .

Read the proposed order .

Borrower Relief

The CFPB will mail checks to consumers who are eligible to obtain redress under the settlement. Consumers do not need to do anything to obtain redress and should be aware of scammers that may try to use CFPB employees’ names and imagery to try to steal money or private information. The CFPB will never require consumers to pay money to obtain redress, nor will we ask for additional information before consumers can cash a redress check that we’ve issued. On the CFPB’s webpage, consumers can obtain general information about CFPB redress checks and more information about how to avoid potential scams .

Since 2013, the CFPB has supervised the student loan market for risks to consumers. In addition to the Navient enforcement action, the CFPB has engaged in a range of supervisory work on the failures in the income-driven repayment system, in partnership with the Department of Education, state enforcement agencies, and banking regulators. This work has identified the shoddy student loan servicing that has derailed borrowers from making progress toward loan cancellation under existing federal programs, including income-driven repayment. This work was instrumental to a 2022 announcement by the Department of Education to implement a fix to correct the failures of servicers and to help borrowers receive or move closer to loan cancellation.

Learn more about the information and resources the CFPB has available for consumers considering student loans and for consumers with student loans.

Read consumer complaints about Navient.

Read consumer complaints about student loan servicing.

Consumers can submit complaints about financial products and services, including student loans and student servicing, by visiting the CFPB’s website or by calling (855) 411-CFPB (2372) .

Employees who believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to [email protected] . To learn more about reporting potential industry misconduct, visit the CFPB’s website .

The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit www.consumerfinance.gov .