Guide to Student Loan Servicer Bond

A Student Loan Servicer Bond is a surety bond required for businesses that manage student loan accounts. It serves as a financial guarantee that the loan servicer will comply with state and federal regulations, protecting borrowers from fraud, misrepresentation, or other unethical business practices.

A Student Loan Servicer Bond involves a legal agreement between three parties:

1. Principal – The student loan servicer required to obtain the bond.
2. Obligee – The state agency that mandates the bond to ensure compliance.
3. Surety – The company that issues the bond.

If the servicer violates laws, such as misapplying payments, failing to provide accurate information, or engaging in deceptive practices, the obligee or affected borrowers can file a claim against the bond. If the claim is valid, the surety compensates the claimant up to the bond’s limit, but the servicer must reimburse the surety for any amounts paid.

A Student Loan Servicer Bond is required in certain states for individuals and businesses that manage, collect, or service student loans. This bond ensures compliance with state regulations and protects borrowers from fraudulent or unethical practices. This applies to activities such as:

• Collect or process student loan payments on behalf of lenders.
• Manage and maintain borrower account records.
• Communicate with borrowers regarding their loans and repayment terms.
• Assist borrowers in preventing default and managing loan obligations.
• Provide customer service related to student loan repayment and account management.

If your business performs any of these activities, check with your state authority or contact us to determine if a Student Loan Servicer Bond is required for compliance. Many states require a Student Loan Servicer Bond as part of the licensing process, including:

The cost of a Student Loan Servicer Bond typically ranges from 1% to 10% of the required bond amount, depending on several factors. For example, a $30,000 bond may cost between $300 and $3,000 annually. Bond amounts vary by state.

Your bond premium is primarily determined by your credit score and may also be influenced by business financials, bonding history, assets, and overall financial stability.

With our streamlined application process, we assess your credit to provide an exact bond cost. We offer bonds to most applicants, including those with bad credit. Apply today to get your personalized quote!

1. Apply For Your Bond

It only takes a few minutes to apply for a student loan servicer bond. Fill out the online application for a surety bond to receive a quote. Because numerous programs are available, we provide competitive rates to our customers based on their qualifying factors.

When Serena contacted us recently about a student loan servicer bond, she was not sure she could qualify with a 595 credit score. After applying online, she received a bond quote quickly. Serena paid her premium online and received her bond via email. Now, she operates a licensed student loan servicing company, helping borrowers manage their loans with confidence.

2. Get Your Bond Quote

With our streamlined application and more than 10 years of experience, we simplify the process of getting a student loan servicer bond.  After submitting your online application, you’ll receive a free, no-obligation quote. 

More than 99% of our applicants qualify for a student loan servicer bond through our surety company. Often, applicants receive an instant quote from us. If your situation is more complex, we will be in touch within 48 hours with a quote.  

3. Purchase Your Bond

After reviewing your bond quote, the final step is to purchase your bond. For your convenience, premiums can be paid online. We will then email the bond to you, or we can mail it if requested. 

With a bond in place, you can complete your application for a student loan servicer license. If you have any questions or encounter any difficulties, our surety bonds experts are here to help you – contact us or call us at (877) 514-5146.

Student loan servicer insurance and bond filing requirements are determined by individual state regulations.

States that require a Student Loan Servicer Bond also mandate a continuous bond term, meaning the bond remains active until officially canceled. The bond form outlines the specific cancellation process.

Although the bond is continuous, the bond premium must be paid annually. To prevent cancellation and maintain compliance, ensure your premium is paid on time each year.

For more information check the bond renewal process.

Can I Get a Bond with Bad Credit?

Yes, you can still get a Student Loan Servicer Bond with bad credit. However, applicants with lower credit scores typically pay a higher premium. We offer specialized programs for applicants with bad credit to help you secure the bond you need.

Does a Student Loan Servicer Bond Guarantee My Business Against Losses?

No, a Student Loan Servicer Bond does not protect your business from financial losses. Instead, it serves as a financial guarantee to protect borrowers and the state from unethical or illegal business practices. If a valid claim is made against the bond, the servicer must reimburse the surety company for any payouts.

Do I Need a Separate Bond for Each State I Operate in?

Yes, if you service student loans in multiple states that require a bond, you will need a separate bond for each state. Bond amounts and regulations vary by state, so it’s important to check the specific requirements for each jurisdiction.

Do Federal Student Loan Servicers Need a Bond?

Federal student loan servicers working directly under contract with the U.S. Department of Education generally do not need a state-level surety bond. However, if a federal servicer also handles private student loans or services loans in states with specific bonding requirements, they may still need to obtain a bond for compliance.

Nationwide Mortgage Licensing System & Registry. (n.d.). Checklist compiler. Nationwide Mortgage Licensing System & Registry. https://mortgage.nationwidelicensingsystem.org/slr/SitePages/Checklist-Compiler.aspx

District of Columbia Department of Insurance, Securities and Banking. (2018, April 20). Student loan servicer regulations [PDF]. https://disb.dc.gov/sites/default/files/dc/sites/disb/publication/attachments/Student%20Loan%20Servicer%20Regulations%20v.4.20.18%20%28REVISED%29%20%28CLEAN%29.pdf

California Department of Financial Protection and Innovation. (n.d.). Student loans and student loan servicing program. California Department of Financial Protection and Innovation. https://dfpi.ca.gov/regulated-industries/student-loans-student-loan-servicing-program/

The 192nd General Court of the Commonwealth of Massachusetts. (n.d.). Chapter 93L, Section 2: Definitions (Mass. Gen. Laws ch. 93L, § 2). The 192nd General Court of the Commonwealth of Massachusetts. https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXV/Chapter93L/Section2

Casetext. (n.d.). Section 17:16ZZ-6. Student loan servicer to use name, location on license, surety bond. Casetext. https://casetext.com/statute/new-jersey-statutes/title-17-corporations-and-institutions-for-finance-and-insurance/chapter-1716zz/section-1716zz-6-student-loan-servicer-to-use-name-location-on-license-surety-bond

Nationwide Mortgage Licensing System & Registry. (n.d.). New Jersey student loan servicer license ESB [PDF]. https://mortgage.nationwidelicensingsystem.org/slr/StateForms/NJ_SLS%20License%20ESB_V1.pdf

Nationwide Mortgage Licensing System & Registry. (n.d.). Rhode Island student loan servicer registration bond form ESB [PDF]. https://mortgage.nationwidelicensingsystem.org/slr/StateForms/RI_Student%20Loan%20Servicer%20Registration%20Bond%20Form_ESB%20v1.pdf