Nelnet's acquisition of Great Lakes Educational Loan Services has been completed for a cool $150 million.
In October, Nelnet announced its plans to acquire Great Lakes. In December, the acquisition was temporarily delayed pending further regulatory approval.
Located in Madison, Wisc., Great Lakes currently employs 1,800 people. At the end of 2017, Great Lakes serviced $224.4 billion in federal student loans, $10.7 billion in Federal Family Education Loan (FFEL) Program loans, and $8.5 billion in private loans.
Jeff Noordhoek, CEO of Nelnet, expressed excitement over the acquisition, adding that the two companies have a combined total of 90 years of experience serving student loan borrowers. Noordhoek said in a press release that this acquisition presents a chance for both companies to continue to help borrowers and “execute together our plans for further enhanced borrower experiences."
Both Nelnet and Great Lakes will continue to service their federal student loan portfolios and maintain independent servicing operations. The two companies have already been working together for nearly two years to develop a new system that will allow them to jointly service their government-owned student loans.
What does this mean for the average borrower? Both Nelnet and Great Lakes have said that current customers won’t experience any changes in their service as a result of the acquisition. And both companies will continue to operate under their own separate names.
Formerly, there were four main companies that serviced 93 percent of the government’s outstanding student loans. And this acquisition now brings that number down to three.
Previously, Nelnet was the smallest of the four main loan servicers. But with $455 billion in student loans for over 16 million borrowers, Nelnet is now the largest of the three.
But the acquisition has raised questions about whether or not this will further limit the competition among student loan servicers. Borrowers are assigned to a student loan servicer and less competition may give servicers fewer incentives to focus on customer service.
The Consumer Financial Protection Bureau (CFPB) has already documented many complaints from borrowers who claimed that their student loan servicers charged unnecessary fees or failed to let borrowers know about their options. However, the CFPB previously reported that Nelnet and Great Lakes received the highest ratings for borrower satisfaction.
Both Nelnet and Great Lakes were awarded their government-owned student loan contracts in 2009. These contracts are scheduled to expire in June 2019.