If you have federal student loans, you might expect the federal government to handle every step of the lending process. You might be surprised, then, to see the name American Education Services on your credit report — and you wouldn't be alone.

Many people don't realize that federal loans are serviced by private contractors such as American Education Services. We'll explain how it all works and walk you through some strategies to save money on your loans.

What is American Education Services? 

The federal government issues student loans but does not service them. American Education Services is one of the private companies contracted by the federal government to service federal student loans. Once it’s time for you to start paying back your student loans, you will make payments directly to the loan servicer.

American Education Services handles Federal Family Education Loan (FFEL) program loans for borrowers. The FFEL program was dismantled in 2010, so American Education Services is not responsible for any new loans. However, it is still responsible for any outstanding FFEL program loans.

If American Education Services is one of your loan servicers, then you have an FFEL program loan. If you want to request deferment or forbearance, change your automatic monthly payment, or switch to an income-driven repayment plan, you will contact American Education Services directly.   

Am I Stuck Using American Education Services?

Borrowers with American Education Services as their loan servicer can switch to a new lender by refinancing. Refinancing entails paying off one or more of your student loans using a new loan obtained through a private lender.

Borrowers usually refinance their student loans to receive a lower interest rate, a lower monthly payment or both. When you refinance, you can choose which term and monthly payment best fit your budget and goals. 

If you refinance to a shorter term, your monthly payments will increase, but the total interest paid over the life of the loan will decrease. Before choosing a shorter term, make sure you can comfortably afford the higher monthly payments.

Refinancing to a longer term will lower your monthly payments but may result in more interest paid over the life of the loan. You can use the difference to invest for retirement, save for a down payment or pay down other debt.

Borrowers can refinance their student loans multiple times. Some borrowers will refinance once a year if they qualify for a lower interest rate. 

Refinance with Juno

Borrowers interested in saving money can refinance with Juno, which negotiates on behalf of borrowers with partner lenders to help each student qualify for the best refinance rates they can given their financial situation. By refinancing with one of these companies through Juno, you’ll receive a lower interest rate than you would by applying with the lender directly.

Borrowers can see what their interest rate will be without receiving a hard inquiry on their credit report, so there’s no harm in checking your refinance offer. 

Here’s how the lenders compare:

Earnest 

Earnest is one of the most popular private student loan companies — and for good reason. It offers some of the lowest rates on the market.

As of Oct. 11, 2021, fixed-rate loans start at 2.48% APR, while variable-rate loans start at 1.88% APR — the lowest rates from any Juno lender. Borrowers who refinance with Earnest through Juno will pay 0.25% less in interest than if they refinance with Earnest directly. 

Unlike the other Juno-affiliated lenders, Earnest does not allow borrowers to use a co-signer. A co-signer can help you get a lower interest rate, and borrowers without a credit history may not qualify for a refinance without one. If this is the case, you can choose one of the lenders listed below.  

Laurel Road 

Laurel Road is a popular lender for health professionals with student loans. Physicians, dentists, nurses, optometrists and physician assistants are eligible to refinance with Laurel Road through Juno.

As of Oct. 11, 2021, fixed-rate loans start at 2.50% APR, while variable-rate loans start at 1.89% APR. 

Borrowers who refinance with Laurel Road through Juno will save an extra 0.25% on interest. Laurel Road allows borrowers to use a co-signer when refinancing. 

Doctors in residency or fellowship can have their payments reduced to $100. This is a significant benefit not available with most private lenders. 

Splash

Splash is a lending marketplace that connects borrowers to multiple lenders. When you apply to refinance with Splash through Juno, you’ll see different offers from several lenders. As of Oct. 11, 2021, fixed-rate loans start at 2.48% APR, while variable-rate loans start at 1.89% APR.  

Borrowers who refinance between $50,000 and $150,000 with Splash will receive a $500 cash bonus, while borrowers who refinance more than $150,000 will receive a $1,000 bonus. 

Borrowers can refinance with a co-signer if needed.