The Verdict
The Great Lakes Higher Education Corporation (often referred to simply as "Great Lakes") is one of the biggest student loan servicing companies in the USA.
Now the first thing you should know is that a company offering student loan servicing doesn't actually provide student loans.
Rather, it acts as a guarantor and intermediary between people who are paying off student loans and the Department of Education (if it's a federal student loan).
Great Lakes also services student loans from private lenders to help ensure payback while also balancing the financial situation of the student borrowers.
Servicing hundreds of billions in student loans. Great Lakes Higher Education Corporation is a not-for-profit company, servicing more than $238 billion in student loans for over 8 million student borrowers.
Great Lakes works with 6,000 schools and 1,100 lenders and employs more than 2,000 people.
Operating out of Madison, Wisconsin, Great Lakes was recently acquired by the student loan company Nelnet (although both continue to operate as separate brands).
Great Lakes' motto is, "Doing what's right to change lives for the better."
Quite fitting, considering the crucial part they play in making higher education (which can open doors toward a better career ) more accessible.
Most helpful for overcoming financial challenges. After looking closely at the services Great Lakes provides, where it's really "changing lives for the better" is in helping people struggling to pay off their student loan.
When you've worked hard to complete your education, it would be devastating to default on your student loan and ruin your credit before you even have a chance to establish a career.
But working with Great Lakes can help ensure that doesn't happen!
Offering flexible payment options. Through programs like income-geared repayment plans and debt consolidation options, those who are vulnerable to default are offered alternatives to pay for their education.
Higher education should improve lives, not set the stage for a lifetime of debt and poor credit.
By facilitating access to education, Great Lakes helps make sure the changes people go through are positive while also helping lenders manage loans provided to student borrowers.
Why You're Lucky to Get Great Lakes
When anyone is approved for a federal student loan from the United States Department of Education, a loan service company is assigned to them.
As one of the biggest student loan servicing companies out there, there's a very good chance a new federal student loan will be assigned to Great Lakes.
Connecting student borrowers with private lenders. The Great Lakes platform is also used to process private student loans offered by financial institutions as well as those offered by the government.
Keep in mind, private student loans don't qualify for some of the services Great Lakes provides for federal loans (like automatic loan forgiveness after 20 years).
But students who need additional private funding for their education can use Great Lakes to find the right loan for them and provide a payment processing platform.
Manage multiple loans through the same platform. The processing for all loans channeled through Great Lakes happens through the Central Disbursement System (CDS), and it allows borrowers to pay multiple lenders.
Great Lakes provides a one-stop solution for accessing and managing both private and federal student loans, providing support from application through to repayment.
Why People Love Great Lakes
Choose Great Lakes to service consolidated federal student loan debt
It can be difficult for a student borrower to manage multiple debts, which can include navigating different interest rates, minimum payments, and payment deadlines.
A great solution for dealing with multiple debts simultaneously is to take out a debt consolidation loan.
One single loan to deal with. The U.S. Department of Education provides Direct Consolidation Loans to bring multiple federal student loan debts under a single loan umbrella.
Information and guidance to help people access a Direct Consolidation Loan are available through the Great Lakes customer support center and website.
It's your choice who services the consolidation loan. Great Lakes also services Direct Consolidation Loans.
Unlike regular federal student loans, in this case you get to choose Great Lakes as your servicer rather than having it assigned.
Unlike some private companies offering debt consolidation loans, there's no consolidation fee for accessing and servicing a Direct Consolidation Loan through Great Lakes.
What Are the Problems?
Processing errors combined with a lack of quality customer service are frequent complaints
When a company services over $200 billion in loans with more than 8 million student borrowers, there's bound to be some complications.
The fact that errors happen in processing loan payments is understandable, but a lack of customer service to deal with these problems when they happen isn't.
The Better Business Bureau (BBB) gives the Great Lakes Higher Education Corporation an A+ rating, but you wouldn't have guessed it from all the negative complaints written about it on the site.
Loan payments are not applied correctly. When customers are able to pay more than the minimum required payment they can choose which loan to apply the extra money toward.
Great Lakes offers the option to choose the loan to pay off first (once interest on all the loans is satisfied) but it seems like borrower's selections are often ignored.
Borrowers trying to apply the "avalanche method" for dealing with debt (where you pay off the loan with the highest interest first) have been frustrated by payment errors.
Other problems include enrolling customers in the wrong payment plan, failing to process income-driven plans, and reporting false information to credit agencies.
Unhappy and unhelpful customer service. Mistakes happen, but when they do, the difference between a good and a bad organization often lies with customer service experience they provide.
There are many complaints online saying the customer service representatives with Great Lakes were rude and unhelpful when errors were brought to their attention.
Although most problems were eventually rectified, the borrowers felt they were treated badly (even though the errors were Great Lakes' fault, not theirs).
Who Does Great Lakes Compete With?
Great Lakes is one of the biggest loan servicing companies in the USA, especially now that it's been acquired by Nelnet, formerly one of its main competitors.
Two other companies—Navient and FedLoan Servicing—remain the main competition for Great Lakes and Nelnet today.
FedLoan Servicing is #1. The single biggest loan servicing company in the United States is called FedLoan Servicing.
There really isn't a lot of difference between what FedLoan offers and what Great Lakes provides to its customers.
Both offer a variety of repayment plans so borrowers can pick the one that works best with their financial situation.
Both provide extensive online support resources to help student loan borrowers choose the best way to repay.
FedLoan and Great Lakes also both offer the same discount (0.25% off the loan interest rate) when a borrower signs up for Autopay (more information on that option below).
Navient fares even worse in terms of customer service than Great Lakes. The other big player in the student loan servicing industry is Navient.
Like Great Lakes and FedLoan, Navient provides customers with traditional fixed-payment options as well as income-based and consolidation options.
Navient offers a unique repayment plan known as a "graduated repayment plan" where your monthly payments increase over time (hopefully as your income increases).
In a survey conducted by the Department of Education, Navient scored the lowest for customer satisfaction among student debt servicing companies (including Great Lakes).
The Question Everyone's Asking
Can Great Lakes help in situations where the borrower is unable to make minimum monthly payments?
Another important function Great Lakes provides as a student loan servicer is helping to protect its most vulnerable customers from the worst-case scenario of default.
Helping borrowers apply for deferment or forbearance. Two temporary solutions available to people who are at-risk for defaulting on their student loans are known as deferment and forbearance.
With either of these options, you can temporarily stop making payments on your student loan or reduce the monthly payment amount.
With deferment, you don't pay interest during the period your payments are suspended or reduced.
With forbearance, interest continues to accumulate even during the period where payments are frozen.
Federal student loan borrowers can apply for deferment or forbearance through Great Lakes as their loan servicer.
While the application is being considered, borrowers still need to keep up with monthly minimum payments or they will become delinquent and eventually default.
Great Lakes can help achieve loan forgiveness or discharge. It is also possible for borrowers to apply for federal student loan forgiveness or discharge through their Great Lakes account.
The federal government can, in special circumstances, forgive all or part of a student loan, or in some cases have it canceled or discharged.
For example, students who have gone on to a career as a teacher, or as a public servant, can apply for forgiveness.
If the school the student was attending was closed, or if they experienced a permanent disability, it could be possible to have the loan canceled or discharged as well.
Great Lakes offers an application for loan forgiveness, cancelation, or discharge that can be accessed, completed, and submitted by logging into a customer account.
How It All Works
When Great Lakes is assigned as your student loan servicer (or if you choose it to service your Direct Debt Consolidation loan) there are a few steps involved in getting started with paying your loans back.
These resources and procedures help establish the repayment format that's best for your situation by balancing what you owe with what you can afford to pay.
Create an online account to access full resources. The first thing you need to do is create an online account with Great Lakes.
The online portal is the easiest way to make loan payments on multiple loans and monitor your balances and planned payments.
You'll need your Social Security number and your date of birth, which will let the system call up your loans and link them to your account.
Once you've created a username and a password, you're ready to start submitting payments through your account.
Calculate different payment plans with the Repayment Planner. One of the benefits of having a loan servicer is the ability to choose from among multiple payment options.
To help with this process, people with a Great Lakes account can use its handy online Repayment Planner.
The planner makes it possible to see how much interest will be paid if certain monthly payment amounts are made over a fixed term.
The length of time it will take to pay off the loan, the progress payments will make in terms of the loan balance, and the total interest paid are all included.
Choose the pace that works for your budget and cash flow. Some might prefer to spread lower monthly payments over a longer time (even though it will cost more in interest).
Others might prioritize getting their loans paid off at the lowest cost possible with higher monthly payments over a shorter length of time.
Sign up for Autopay and get 0.25% shaved off your loan interest rate. Loan service companies love it when people sign up for Autopay since it means there is less chance for borrowers to miss a payment.
When Great Lakes borrowers sign up for Autopay through their online account, their loan interest rate is reduced by 0.25%
One-quarter of one percent might not sound like a lot of savings, but it can add up.
Save almost $1,000. For example, if you borrow $30,000 with a 20-year repayment schedule, the difference between paying 4% interest and 3.75% interest is $942.62.
Flexible repayment plans can benefit low-income borrowers. One of the biggest benefits of going through a loan servicing company like Great Lakes is the ability to choose between standard repayment plans or alternative income-driven plans.
Pay identical monthly payments over 10 years with a standard plan. The first type of repayment plan is the Standard Repayment Plan, where borrowers are charged a fixed monthly payment, usually over 10 years.
Support for borrowers on a Standard Repayment Plan includes financial planning resources available through the Great Lakes website's Knowledge Center.
Four income-based repayment plans available. When a student is fresh out of school and trying to establish their new career, monthly loan payments can really weigh them down.
To help students whose current income isn't enough to maintain a Standard Repayment Plan,Great Lakes offers four different payment plan formats.
REPAYE can secure lower monthly payments and potentially loan forgiveness. Borrowers serviced by Great Lakes who are set up on the REPAYE (Revised Pay As You Earn) plan pay 10% of their monthly discretionary income toward their student loans.
If their income increases each year, the 10% calculation will increase, to the point that monthly payments could be set higher than the Standard Repayment Plan.
If the borrower keeps up on their payments and there's still a balance left over after 20 or 25 years, it can be forgiven (but the borrower will pay tax on the forgiven amount).
PAYE is for people with high debt-to-income ratios. A similar format is called PAYE (Pay As You Earn), which is designed for people with high debt and very little income.
The borrower pays 10% of their discretionary income, and after 20 or 25 years the balance is forgiven.
The big difference comes into play if your income gets to the point where 10% of it is actually higher than what a person would pay on a standard repayment plan.
A PAYE plan participant will never be asked to pay more per month than a standard plan would require.
It will, therefore, cost more in interest since there will be more unpaid principal remaining over the life of the loan.
IBR also helps lower monthly payments. Income-Based Repayment (IBR) plans are almost identical to PAYE formats, except you can pay 10–15% of your monthly income.
You will never be charged more than a standard repayment plan would charge with an IBR plan, and outstanding balances are forgiven after 20–25 years.
Pay off loans faster with an ICR. The income-geared option with the ability to pay off loans the quickest is known as Income Contingent Repayment (ICR).
With an ICR plan, you'll pay either 20% of your monthly discretionary income or the amount you'd pay monthly for a fixed payment standard loan over 12 years (whichever is less).
If you still have an unpaid balance after 25 years, it is forgiven.
The Great Lakes mobile app saves time and increases convenience
Great Lakes offers borrowers whose loans it services the opportunity to download and use a mobile app (available for iOS and Android devices).
Manage everything with the App. Through the app, you can make or schedule payments for your student loans.
You can also use the app to monitor your account details—for example, the unpaid balances remaining on your loans or your payment history.
The app will even give you reminders when your payments are coming due and confirmations when payments have been processed.
If you're on an income-geared payment plan, you can use the app to submit the documents you need each year to prove your current income.
FAQ
Great Lakes helps make sure student loans lead to financial success, not financial ruin
If Great Lakes is assigned to you, or if you choose it as your servicer for a Direct Debt Consolidation Loan, you should make the most of what the company offers.
Use the Repayment Calculator to determine what you can afford, and if you qualify for a repayment plan geared to your income, work with Great Lakes to choose the best option.
Sign up for automatic payments and you could save hundreds of dollars over the life of your loan.
If you find yourself in need of a temporary forbearance or deferment, Great Lakes is there to help make it happen.
Having a federal student loan servicer is a requirement, not an option.
That's because the government knows the people it lends to will have a much lower chance of defaulting with the support of a loan servicer.
After all, the goal of funding people to get access to higher education is to help them earn more income by securing a more lucrative career, not get buried in debt.
Have you tried Great Lakes as your student loan servicer?
How has it worked for you?
Any interesting stories (or student-loan-related nightmares) to share with the rest of us?
Let us know in the comments below!
