Student Loan Servicer Bond Guide
Student loan servicers in several states need a surety bond as part of the licensing process. Learn how they work and get a free quote with this guide.
Bond Overview
- Purpose: To ensure that loan servicers comply with state regulations and properly handle borrowers' funds
- Who Needs It: Student loan servicers in several states
- Required Amounts: $25,000–$50,000, based on state requirements
- Premium Rates: Typically 1–10% of the coverage amount, credit-based
Keep reading to learn how to navigate the bonding process as a student loan servicer.
What Are Student Loan Servicer Bonds?
A student loan servicer bond is a type of surety bond required for businesses or individuals who manage or service student loans. These bonds ensure that loan servicers comply with state regulations and properly handle borrowers' funds. If the servicer fails to meet their obligations, borrowers and the government are protected by the bond.
How Much Do Student Loan Servicer Bonds Cost?
Student loan servicer bonds typically cost between 1% and 10% of the total bond amount. Prices vary depending on various factors, such as state regulations, credit history, business experience, and financial stability. Select your state below to apply for a free, personalized student loan servicer bond quote in your location.
How Do Student Loan Servicer Bonds Work?
A student loan servicer bond binds three parties in a legal contract:
- Principal: The loan servicer required to obtain the bond.
- Obligee: The government agency that requires the bond.
- Surety: The insurance company that issues the bond, guaranteeing that the principal will follow legal and ethical guidelines.
If the principal fails to meet the bond terms, the surety covers the claims, but the principal must later reimburse the surety for any damages.
Who Needs a Student Loan Servicer Bond?
Student loan servicer bonds are required for individuals and companies servicing student loans in the following states:
- California
- Massachusetts
- New Jersey
- Rhode Island
- Washington, D.C.
These bonds ensure that student loan servicers operate legally and responsibly, protecting the interests of borrowers and the state.
How to Get a Student Loan Servicer Bond
SuretyBonds.com offers a quick and simple process for obtaining a student loan servicer bond. Just follow these three steps:
- Apply online at SuretyBonds.com.
- Receive a free quote within one business day.
- Purchase your bond online or by phone.
After you receive your physical or digital bond form, be sure to file it with the obligee to be considered officially bonded.
How Do I Renew My Student Loan Servicer Bond?
Student loan servicer bonds last for a one-year term and require annual renewal. We’ll send out renewal notices starting 90 days before your bond expires. Pay the renewal invoice and submit any documentation as instructed to maintain your active bond status.
Can I Get a Student Loan Servicer Bond With Bad Credit?
Yes, you may be able to get a student loan servicer bond even with bad credit. However, keep in mind that this may lead to a higher premium. When you apply, we will explore our nationwide markets to find the best available rate for you. Apply now to get started!
