Great Lakes Educational Loan Services is a student loan servicer that handles both private and federal student loans. A loan servicer doesn’t lend the money. Instead, these organizations handle the administrative aspects of the loan for the lender.
In practice, that means you deal with Great Lakes (and make your payments to it) but the loan itself is through another provider. You apply through that provider and then pay Great Lakes. Yes, it can be a little confusing, which is why some people are (understandably) skeptical when they receive paperwork from the company in the mail.
Great Lakes is a nonprofit organization that handles over $200 billion in student loans. That makes it one of the largest loan servicers in the country. And as one of the few companies contracted by the government to service federal student loans, it handles up to 40% of all outstanding federal loans.
Beyond federal loans, Great Lakes partners with 6,000 schools and over 1,000 private lenders around the country to service non-federal loans. The company also has a philanthropic arm that offers scholarships, grants and advising services to students.
How Do Great Lakes Student Loans Work?
Loan servicing can be a confusing topic. Put simply, the lender funds your loan and then hands it off to a loan servicer, which then handles the repayment and day-to-day administrative tasks involved. It’s somewhat analogous to a billing service.
You can’t choose your student loan servicer. This is handled by the lender. That means that if you’re unhappy with your servicer, your options are somewhat limited — you can’t just switch to a different provider.
However, if you consolidate your loans (such as with a direct consolidation loan) or refinance your debt, you’ll typically get a new provider, so that can be an option. Just note that with the latter you’ll lose any federal repayment benefits, such as the income-based repayment plans discussed in the next section.
Speaking of repayment, if your loan is serviced through Great Lakes, that means you’ll be making your monthly payment to them. You have several payment methods at your disposal:
- Check or money order, paid through good old-fashioned snail mail.
- Over the phone, either using an automated system or by speaking directly to a real human being.
- Online at the Great Lakes website.
- Using the Great Lakes mobile app, available for iOS and Android.
You can use a debit card to make your loan payments, but not a credit card. It’s also possible to set up auto-pay so that you don’t have to worry about remembering to make payments (you might even be able to shave a little off your interest rate by doing so).
What Repayment Options Does Great Lakes Offer?
Great Lakes student loans can be repaid in a variety of ways, depending on your individual needs and whether you have a federal student loan or a private student loan. Let’s break it down:
Private Student Loans
Repayment options on private loans depend almost entirely on the lender — and remember, Great Lakes is not the lender, they only collect. That said, if you’re having trouble making your payments or otherwise need to alter the terms of your student loan payments or want to try to get a lower interest rate, it’s worth contacting your lender.
Technically, private lenders don’t need to offer any special terms for anyone, regardless of financial status. That said, some will allow repayment terms similar to the federal options, so it never hurts to ask.
Federal Student Loans
If you’re repaying a federal loan through Great Lakes, you have a lot more freedom. That’s because you’ll get access to the full spectrum of federal repayment options.
The Standard Repayment Plan for federal student loans is fixed payments over a 10-year term. If that doesn’t work with your circumstances, there are several types of federal student aid available, including income-based student loan repayment options:
Revised Pay As You Earn (REPAYE)
The REPAYE program offers the potential for lower monthly payments and loan forgiveness. With this program, your payments are based on your monthly income — 10% of your discretionary income, specifically. Payments are recalculated annually based on family size and total income.
It’s worth noting that if your income is high, your payment can end up higher than with the Standard Repayment Plan. However, if your paychecks are on the lower side, you can end up saving significantly. Finally, any remaining loan balance is forgiven after 20 to 25 years of repayment (although you may be liable for paying income tax on the forgiven amount).
Pay As You Earn (PAYE)
The PAYE program is similar to REPAYE but aimed at people with high debt relative to their income. It offers the same terms (10% of discretionary income and forgiveness after 20-25 years), but with PAYE, your monthly payment will never go above what it would be with the Standard Repayment Plan.
The tradeoff for that protection is the fact that you’ll ultimately pay more on the loan. Lower monthly payments mean loans take longer to pay off with the PAYE program, which in turn means more interest accrued over the life of the loan, even with a low-interest rate.
Income-Based Repayment (IBR)
IBR plans are intended for people with high debt-to-income ratios. These plans always offer payments that are lower than the standard 10-year repayment terms. However, they can be more than with PAYE and REPAYE — between 10 and 15 percent of your discretionary income.
IBR payments can change from year to year based on family size and income. The goal of this program is to help keep monthly payments manageable, with the caveat that you can end up paying more interest over the life of the loan (because of the lower payments). Any outstanding balance is forgiven after 20-25 years of repayment.
Income-Contingent Repayment (ICR)
The Income-Contingent Repayment plan is designed to help you repay your loans faster over time, as your income increases. As such, it has higher monthly payments — the lower of either 20% of discretionary income or the income-adjusted amount you would pay for a fixed loan term of 12 years.
Your monthly payments on ICR plans can end up being above the Standard Repayment Plan rate. As a tradeoff, the outstanding balance is forgiven after 25 years.
Choosing one of these options can be a significant help in making your payments and ensuring that you remain in good standing.
Great Lakes Review: The Pros and Cons
We’ve rounded up the pros and cons of Great Lakes. Though you don’t get to pick a loan servicer, it’s good to know as much about them as possible, including your payment options.
Pros
- Federal repayment options: Since Great Lakes is a federal student loan servicer, you’ll have access to all the standard federal options, such as income-based student loan repayment and the REPA
- Lots of payment methods available: Great Lakes customers can pay using a variety of methods, including check, money order, debit card, and automated withdrawal.
- Long track record: Great Lakes has been in business for a long time and is a loan servicer specifically selected by the federal government as a provider.
Cons
- Lawsuit: Great Lakes was one of the companies in a class-action lawsuit alleging that it mishandled CARES pandemic relief funds. This won’t necessarily impact your student loan repayment.
Frequently Asked Questions (FAQs) About Great Lakes Educational Loan Services
We’ve answered some of the most common questions about Great Lakes Education Loan Services.
Yes, Great Lakes is legit. It’s one of the largest federal loan servicers in the country, and the federal government trusts it enough to contract it to service its student loan programs. Although getting unexpected mail from a company claiming you owe money might be jarring, in this case, it’s normal.
Not at all. Great Lakes doesn’t provide loans — it only services federal student loans or loans provided by private organizations. If you’ve ever taken out a student loan, there’s a pretty good chance it ended up in the hands of Great Lakes to collect payment.
If you’re not sure who your loan servicer is, you can contact the Federal Student Aid Information Center at 1-800-433-3243 to find out. You can also look up your information in the National Student Loan Data System.
Neither. Since Great Lakes doesn’t provide the loan, it also doesn’t impact the private or federal status of any loans you’re paying through it.
This means that the loan you’re paying through Great Lakes could be either private or federal, but that status is determined by the financial institution that provided the loan in the first place.
You pay it off! Once your student loans are paid off (or you reach the 25-year forgiveness point for certain federal loans), you’ll be all done with Great Lakes. Until then, the only other way to get rid of them is to consolidate your debt, which may see your student loan handed off from Great Lakes to a different servicer.
Some federal loans may have the remaining balance forgiven after a repayment period of 20 to 25 years. It’s important to note that this only applies to loans on one of the income-based repayment plans (REPAYE, PAYE, IBR, and ICR) mentioned above. You still have to make loan payments for those 20 years, as well — you can’t just ignore the loan and have it be forgiven in a couple of decades.
To find out if you’re on one of these plans, your best bet is to contact your loan servicer — if you’re reading this, that’s likely Great Lakes.
Penny Hoarder contributor Dave Schafer has been writing professionally for nearly a decade, covering topics ranging from personal finance to software and consumer tech.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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