Dealing with student loan repayment is no small feat, especially for federal student loans. One of the big players in the handling of federal student loans was fed loan services for Student Loan Borrowers, known simply as FedLoan. While the servicer is no longer accepting new accounts, many borrowers continue to run across its legacy in the story of student debt. This article looks at what FedLoan was, how it worked and what borrowers should understand today about these federal loan servicers.
What Is FedLoan?
FedLoan Servicing was a publicly-held student loan servicer that was a division of the Pennsylvania Higher Education Assistance Agency (PHEAA). It was one of multiple firms paid by the U.S. Department of Education to handle federal student loans. Its duty was mainly:
- Collecting payments
- Managing deferments and forbearances
- assisting borrowers with plans to repay
- overseeing PSLF applications and other information about PSLF
FedLoan was an important part of the federal student loan ecosystem, particularly for borrowers applying for loan forgiveness through the PSLF program.
fedload and the Public Service Loan Forgiveness (PSLF) Program
FedLoan garnered a lot of attention as the only servicer for the PSLF program. This federal program provides eligible borrowers who work in public service jobs with the ability to have their remaining loan balance forgiven after 120 qualifying monthly payments.
When a borrower would apply for PSLF or send in an Employment Certification Form (ECF), their loan was automatically sent over to FedLoan Servicing. This made FedLoan the de facto servicer for public service workers like teachers, nurses and not-for-profit employees.
How FedLoan Operated
There were a few services that FedLoan offered to borrowers:
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Account Management
Borrowers also had the option to log in to the FedLoan site to see their balances, make payments and update personal information.
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Repayment Plan Assistance
FedLoan assisted borrowers to select or shift to federal repayment plans (e.g., IDR, Standard, Extended, Graduated Plans).
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Loan Consolidation Guidance
They provided information and support for borrowers interested in consolidating federal loans.
Forgiveness Tracking
fedload tracked eligible payments and employment status for PSLF and Teacher Loan Forgiveness.
Customer Support
fedload offered phone and online support to assist borrowers in navigating their options.
Controversies And Difficulties
FedLoan was important for federal student loan servicing but not without its detractors. Fedloan and its parent company, PHEAA, have had multiple complaints and lawsuits filed against them for:
- Poor handling of PSLF monitoring
- Mistakes in structuring qualifying payments
- Slow paperwork processing
- Inadequate customer service
A 2017 Consumer Financial Protection Bureau (CFPB) audit found that FedLoan was not properly monitoring payments for PSLF, causing harm to borrowers. These continuing problems prompted the Department of Education to review its contract with FedLoan.
The End of FedLoan Servicing
PHEAA said in July 2021 that it would not renew a contract with the U.S. Department of Education. This meant FedLoan Servicing will officially terminate its federal student loan servicing by the close of 2022. All borrower accounts serviced by FedLoan were assigned other loan servicers, such as:
- MOHELA (and it’s especially the case with PSLF accounts)
- Aidvantage
- Nelnet
- Edfinancial
Borrowers with transferred loans received notification via mail and email about how to access their new accounts.
What Borrowers Should Know After FedLoanGov
Despite the fact that FedLoan is winding down, many people who were past recipients of their loan servicing are now handling loans themselves. Here’s what you should do:
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Identify Your New Servicer
If your loans were serviced by FedLoan, you can find out your new servicer by logging in to your Federal Student Aid (FSA) account, where you can also check the new company’s website. gov.
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Register with Your New Servicer
When you are notified of your new servicer, sign up for an account on that servicer’s website to monitor your loan balance, repayment history and other important documents.
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Double-Check Payment Records
Ensure both your payment history and your eligible PSLF payments were properly transferred. If you do discover discrepancies, get in touch with your new servicer right away.
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Re-certify Your Income
And if you’re on an Income-Driven Repayment (IDR) plan, make sure to recertify your income and family size each year. Delays may cause rates to increase or for interest to be capitalized.
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Monitor PSLF Progress
If you are in pursuit of PSLF, you will still have to submit the paperwork that proves that your payments are counted toward PSLF and confirm your employment annually with your new servicer, which will likely inform MOHELA.
Options and the Future of Loan Servicing
FedLoan’s departure is part of the Department of Education’s efforts to transition to a next-generation loan servicing system. The aim is to provide borrowers with a single platform where they can log in more easily, cut through the noise, and improve customer service.
Until that time, there are still multiple servicers:
- MOHELA (Public Service Loan Forgiveness) We still love you!
- Aidvantage
- Nelnet
- Edfinancial
- Great Lakes (until their books are completely turned)
Borrowers should ensure that they are well-updated on changes and visit the official Federal Student Aid website for further guidance.
FAQs About FedLoan
Q1: Is it possible to contact FedLoan for loan help?
No, FedLoan is now out of the loan servicing business. Borrowers need to reach out to their new loan servicer.
A2: Does my PSLF progress still count after FedLoan changes over?
Yes. All PSLF information was transferred to MOHELA, the new PSLF servicer. Keep sending in your employment certification forms to keep track of where you stand.
Q3: I think I’m being shorted payments by my PSLF tracker. What should I do?
Call MOHELA right away to contest And get documentation. Keep copies of all correspondence and records of any payments.
Conclusion
FedLoan Servicing was a major player in handling federal student loans for more than a decade, particularly through managing the Public Service Loan Forgiveness program. Even though it has left the servicing business amid scandals and systemic issues, its legacy is still felt by millions of borrowers.
If FedLoan serviced your loans, be proactive that your transfer to a new servicer is processed, your payment history is accurate and your progress toward forgiveness doesn’t miss a beat. Keep up to date by visiting studentaid. gov and reaching out to your new loan servicer, if you have questions about paying back your loans or about forgiveness programs.
Gaining insight on the effects of FedLoan and their closure will help borrowers to make informed decisions in the new landscape and to positively influence their financial future.
