Guide to Student Loan Servicer Bond

A student loan servicer bond is a surety bond required for businesses or individuals involved in servicing or managing student loans.

The purpose of a student loan surety bond is to ensure compliance with state regulations. Student loan servicers are a financial protection for borrowers and the government in the event the servicer does not comply with regulations.  

A student loan servicer bond is a legal contract that involves three parties:

• Principal: The loan servicer required to obtain the bond.
• Obligee: The entity requiring the principal to get bonded.
• Surety: The company that issues the bond.

If the principal does not comply with the terms of the bond, an affected party can file a claim with the surety. The surety investigates the claim to deem its validity. On a valid claim, the surety provides compensation to the claimant. 

The principal is then obligated to reimburse the surety for the full amount of the claim. See How Do Surety Bonds Work? for more information. 

In certain states, individuals and businesses that manage student loans must obtain a Student Loan Servicer Bond. This applies to activities such as:

• Collecting or soliciting payments from a student loan borrower.
• Maintaining account records for a loan.
• Communicating with the student loan borrower regarding the loan on behalf of the owner of the loan.
• Interacting with a borrower, including activities to help prevent default on loan obligations.

States requiring a Student Loan Servicer Bond include:

The cost of a student loan servicer bond typically ranges from 1% to 10% of the required bond amount, depending on various factors. For example, a $25,000 bond will cost anywhere from $250 - $2,500 annually. The bond amounts vary by state.

Your bond cost, also known as the bond premium, is primarily based on your credit score and may be influenced by factors such as business financials, bonding history, assets, and overall financial stability.

With our streamlined application process, we assess your credit score to determine your exact bond cost. We offer bonds to most applicants, including those with bad credit.

Obtaining a student loan servicer bond is a quick, hassle-free process. Simply walk through these easy steps.

1. Submit Your Bond Application

To begin, apply for your student loan servicer bond using one of these two convenient methods:

1. Apply for a bond online – Our bond application is available online 24/7. Our customers usually complete the short form within a few minutes. 
2. Call us at (888) 592-6631 – Our bond specialists are available to answer your questions and assist you with the licensing and application process.

When applying, you will need:

• Bond name 
• Bond amount
• Email and contact information

We will quickly review the application and ensure that you pass the credit check and financial requirements. Our customers never wait long for a response from us.

2. Receive a Bond Quote

Typically, we provide immediate bond quotes to our customers. We will happily review your bond quote with you upon request. 

3. Buy Your Student Loan Servicer Bond

To finalize your purchase, take a few minutes to pay your invoice and sign the documents online. Upon doing so, you will receive the original bond by email. 

If you have any questions regarding the student loan servicer bond and requirements, please contact us.

The insurance and bond filing requirements for student loan servicers are established at the state level. 

The states that require a student loan servicer bond also require a continuous bond term. This means that the bond remains in force until it is canceled. The bond form details the specific process for canceling a bond. While the bond is continuous, the bond premium is due annually. To avoid the cancellation of your bond, ensure that your bond premium is paid in a timely manner each year. 

For more information check the bond renewal process.

Can I Get a Bond with Bad Credit?

Yes, you can still obtain a Student Loan Servicer Bond with bad credit. However, surety bond providers typically charge a higher premium for applicants with lower credit scores. We offer specialized programs for high-risk applicants to help secure the necessary bond

See Bad Credit Surety Bonds for more information.

How Do I Avoid Student Loan Servicer Bond Claims?

You can avoid surety bond claims by running your business lawfully and ethically. Valid claims are only possible if you operate outside the law or your bond agreement.

At JW Surety Bonds, we have bond claim specialists to assist you with claims made against your bond. They will walk you through the claim process and personally investigate the claim. Stacey, one of our bond claim specialists, recently saved a client over $30,000 by identifying and proving a fraudulent claim.

For more information, see our guide: Why You Need to Avoid Claims.

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.

Are Federal Student Loan Servicers Required to Have a Bond?

Federal student loan servicers contracted by the U.S. Department of Education typically do not need a state-level surety bond. However, if a federal servicer also manages private student loans or operates in states with specific bonding requirements, they may still be required to secure a bond to remain compliant.

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