The federal government expects to issue more than 21.7 million student loans totaling nearly $109 billion between Oct. 1, 2013 and Sept. 30, 2014, according to reports.
Those loans will be in addition to the nearly $1 trillion in outstanding loans through the Federal Family Education Loan and direct loan programs.
The Department of Education issues the loans, but after the amount is paid out a loan servicer steps in to handle billing and payments.
Currently, the government contracts with 11 loan servicers, including Sallie Mae, Nelnet and Mohela – a figure that has increased from one in 2008 as the government shifted from issuing loans under a public-private partnership to the current direct lending system.
That change has left some borrowers with two servicers for their federal loans.
"Our goal is to always have all of a borrower's loans serviced by the same service provider," says Chris Greene, a spokesman with the Office of Federal Student Aid at the Department of Education.
A student's loans would often be transferred from one servicer to another to do so. And since the government's contract with its original, single loan servicer is set to expire, those loans – which could number more than 10 million, officials say – must be transferred before the end of the year.
[Read more about working with student loan servicers.]
Ideally, this transition would be seamless, but graduates say that isn't always the case.
Sara Sedlacek has seen both sides of the coin. She and her husband Rob Krysh graduated from the University of Iowa in 2005 and 2008, respectively, and both have student loans. Her loans are serviced by Nelnet. Her husband's were transferred to Mohela in August.
"I've never had a problem with Nelnet," Sedlacek says. "Everything is automatically taken out, so we didn't miss any months or anything."
Krysh's loans are another story.
Between Aug. 19 and Oct. 25, Sedlacek says they received at least three letters a week from Mohela, all containing the exact same information.
"They explained the terms and said 'This is not a bill. We'll notify you when a payment is due,'" she says. "We never ever got notification of the payment due date or the payment amount."
[Learn how to get rid of student loan debt, without paying for it.]
A payment of $57.20 was unexpectedly deducted from their bank account on Oct. 8.
"The payments aren't huge, but it would have been nice to have a date, because at the time, I was switching jobs," says Sedlacek, who now works in nonprofit fundraising. The couple is living off one income as they try to get their business, a coffee shop, off the ground. They are also expecting their first child in February.
"We kind of had to rebudget," she says. "It wasn't a big deal, but I can imagine for other people it might be."
Sedlacek and Krysh are not alone.
More than 2,600 student loan complaints against Sallie Mae have been filed with the Consumer Financial Protection Bureau since March 2012, when the bureau began accepting complaints about financial products and services. Almost 60 of those complaints were about federal student loans, according to the bureau's database.
Keeping contact information current can help borrowers avoid any issues when their student loans are transferred, says Patricia Christel, a spokeswoman for Sallie Mae.
Those who run into issues should not hesitate to contact their servicer, she says.
Borrowers with Nelnet and Mohela have also had problems. The Better Business Bureau closed 285 complaints against Nelnet and 163 complaints against Mohela in the past three years, the majority of which were billing and collection issues.
Graduates with federal student loans can do one simple thing to help smooth transition from one loan servicer to another: open their mail.
"When you get stuff from your servicer, whether it's email or snail mail, open it and read it," says Greene, with the Department of Education.
"That's probably the single most important piece of advice," he says.