American Education Services

Written by Nicole Madison
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American education services use certain terms to discuss student loans and student loan consolidation. If you are not familiar with the terms these services use, you may feel very confused about the consolidation process. Perhaps even more disturbing is the fact that you could make a serious financial mistake just because you did not understand something. Remember, always ask questions to ensure you understand everything you need to know about consolidation in order to make the best choices for your financial future.

Understanding American Education Services' Commonly Used Words

American education services frequently use the words lender, holder, and servicer in their literature about student loans. A lender is an entity that provides money in the form of a loan to a borrower. A holder is an organization that actually owns the borrower's loan. The borrower actually owes repayment to the loan holder. A loan servicer is an organization that helps to administer the student loan program. Loan servicers handle the disbursement of loan funds, monitor loans, and provide borrower assistance during the repayment period.

At times a lender will choose to sell a loan to another lender. When this happens the result is a new loan holder for the borrower. Lenders or holders, often relinquish the work of administering the loan to a servicer. The servicer then takes over the work of communicating with the borrower, disbursing funds, collecting payments, and monitoring loan status.

This maze of lenders, holders, and servicers can be hard to keep up with, especially if you have multiple loans to manage. Consolidating your student loans will make this easier as you will have only one lender or service to remember. If your lender sells your consolidation loan to a new loan holder, you will usually be notified.

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