Introduction
Student loans can be complicated, particularly with the different loan servicers in the market. FedLoan Servicing, which was run by the Pennsylvania Higher Education Assistance Agency (PHEAA), is one of the most prominent federal student loan servicer. Although FedLoan was instrumental in managing federal student loans — including the Public Service Loan Forgiveness (PSLF) program — it formally severed its contract with the U.S. Department of Education in 2022.
In this piece, we will cover everything you need to know about FedLoan Servicing, including its history, services, transition timeline, and options for borrowers managing federal student loans.
What Was FedLoan Servicing?
FedLoan Servicing was among the largest federal student loan servicers in the country. Launched in 2009 by the Pennsylvania Higher Education Assistance Agency (PHEAA), it was used to service millions of student loan accounts. The servicer was particularly important because he managed the Public Service Loan Forgiveness (PSLF) program that allows public sector workers to have their loans forgiven after 120 qualifying payments.
But FedLoan, facing mounting criticism and operational difficulties, chose not to renew its contract with the U.S. Department of Education. Consequently, all loans that were previously serviced by FedLoan were moved to other loan servicers.
What is FedLoan’s Role in Student Loan Management?
FedLoan provided vital services to borrowers, including:
Loan Repayment Management
Borrowers could log in to their accounts via the FedLoan website and make payments, enroll in autopay or track their loan balances. The servicer also outlined several repayment options, including:
- Standard Repayment Plan (10 years of fixed payments)
- Graduated Repayment Plan (Lower payments that rise over time)
- Income-Driven Repayment Plans (IDR) (Payment based on income and family size)
The Public Service Loan Forgiveness (PSLF)
FedLoan was the sole servicer for PSLF, so borrowers with jobs in government or nonprofit organizations had to submit their employment certification forms and payment histories to FedLoan.
Loan Consolidation and Forgiveness
The servicer helped borrowers consolidate multiple federal loans into one through a Direct Consolidation Loan, making repayment less complicated.
Acceptable Forbearance and Deferment Options
For borrowers with financial difficulties, FedLoan offered forbearance and deferment, options by which defaulters could halt or reduce payments temporarily.
The Reason FedLoan Cut the ContractShort
In July 2021, FedLoan announced it would not renew its contract with the U.S. Department of Education, citing multiple reasons, including:
- Operational Challenges: PSLF applications and other federal loan programs complicated operational processes.
- Regulatory Scrutiny: The servicer was criticized for mishandling PSLF applications, sparking borrower complaints and lawsuits.
- Problems with Customer Service: Numerous borrowers experienced frustrations with customer service, including long wait times and inconsistencies in the information provided to them about their loans.
As a result, FedLoan started off transferring all its loans to other federal loan servicers, like MOHELA, Aidvantage, Edfinancial and Nelnet.
What’s It Like for FedLoan Borrowers?
After the departure of FedLoan, the U.S. Department of Education redistributed borrowers to new servicers. Here’s what happened:
- PSLF Borrowers Moved to MOHELA: Accounts for borrowers enrolled in PSLF were moved to MOHELA, the PSLF servicer since it took over servicing for the program.
- Other Loans Were Transferred to Other Servicers: Borrowers transferred to Aidvantage, Edfinancial or Nelnet, depending on the loan type.
- Automatic Transition: The borrowers’ transition to the new loan servicer was automatic, but they were advised to confirm the new loan servicer by checking their account on StudentAid. gov.
How to Find Out Who Your Loan Servicer Is
If you were previously with FedLoan and do not know your new servicer, follow this:
Log into StudentAid.gov
- Use your FSA ID to log in.
- Go to the “My Loan Servicers” section.
Review Loan Transfer Details
- Your new loan servicer will be listed on the website.
- Check in with your new servicer regarding account details and repayment options.
Update Your Payment Method
- But if you had autopay arranged through FedLoan, you may have to reauthorize it with your new servicer.
After the Transition Out of FedLoan
For those impacted by transition, there are a few steps to take:
Verify Your Loan Information
- Check that your loan balance, payment history and PSLF progress were properly transferred.
Update Your Address And Contact Number in fedloan
- When you transition to your new loan servicer, be sure to update your phone number, email and mailing address with them.
Request a new Income-Driven Repayment (IDR) plan
- If you have been, on an IDR plan, make sure your payment plan is still active and turn in any required recertification.
Check Your PSLF Status
- If you are working toward Public Service Loan Forgiveness, visit MOHELA’s website to check your progress.
Be Aware of Scams
- Scammers love to target borrowers in transitional periods. Never share your personal information or payment details with your unknown contacts.
The New FedLoan: What Are Your Options After October 2023?
Since FedLoan isn’t an active servicer anymore, here are the primary federal loan servicers that borrowers should know about:
MOHELA (Missouri Higher Education Loan Authority)
- Public Service Loan Forgiveness (PSLF) processor.
- Provides support for repayment and customer service
Aidvantage
- Services loan previously administered by Navient.
- Provides IDR plans, deferment and forbearance options.
Edfinancial
- Offers general guidance for loan servicing and repayment.
Nelnet
- A longstanding federal loan servicer that offers several repayment plans.
Great Lakes Educational Loan Services (GL)
- Helps borrowers manage and consolidate payments.
For the right loan details, borrowers should contact their assigned servicer directly.
fedloan Conclusion
While FedLoan Servicing was an important player in the management of federal student loans, its exit from the industry was a major change for borrowers. The move to MOHELA, Aidvantage, Edfinancial, and Nelnet posed new challenges but also
