fedloan Introduction
FedLoan Servicing, or MyFedLoan, was one of the largest student loan servicers in the country, a company that managed federal student loans for the U.S. Department of Education. It was key to helping borrowers with loan repayment, deferment, forbearance, and Public Service Loan Forgiveness (PSLF) applications. But FedLoan Servicing chose not to renew its contract with the Department of Education in 2022, and its borrowers have been transferred to other loan servicers. Even though MyFedLoan is no longer active, borrowers who had once engaged with the servicer still need to be aware of its role, services, and transition process.
What Was FedLoan Servicing?
FedLoan Servicing is a loan servicer that was developed by the Pennsylvania Higher Education Assistance Agency (PHEAA) to oversee federal student loans. It was also one of the few servicers under contract with the Department of Education to manage Direct Loans, including those that qualify for PSLF. MyFedLoan offered a web-based interface through which borrowers could manage their loans, make payments and apply for repayment plans.
Overview of FedLoan Servicing Responsibilities
Loan Repayment Assistance: FedLoan was a resource for borrowers to determine which loan repayment option they took, including income-driven repayment (IDR) plans.
- Public Service Loan Forgiveness (PSLF): It served as the designated servicer for PSLF applications and payment tracking.
- Deferment and Forbearance: FedLoan handled requests for suspending loan repayment temporarily, due to financial hardship, unemployment or medical problems.
- Direct Number Strategy: Borrowers who own direct loans might obtain advice to consolidate their loans to manage them better and be more qualified for forgiveness programs.
- Payment Processing and Customer Support: FedLoan offered an online portal for borrowers to make payments, access their account balance, and connect with customer service for support.
The Closure of MyFedLoan: What Was the Impact?
In 2021, FedLoan Servicing announced it would no longer service federal student loans, after which borrowers were reassigned to new servicers. The contract officially ended in 2022, at which point its loan portfolio was transitioned to other servicers, including MOHELA, Aidvantage, Edfinancial and Nelnet.
Reasons for FedLoan’s Exit
There were several reasons FedLoan decided to stop servicing federal student loans:
- Greater Regulatory Scrutiny: The company drew fire for its handling of PSLF applications and borrower complaints.
- Challenges in Operations: The portfolio of student loans she managed grew larger alongside changes to federal policy that had to be followed.
- Government Contract Changes: The Department of Education issued new servicing contracts that mandated stronger borrower protections, which may have been a factor behind FedLoan’s exit.
- Business Reasons: The servicing contract may have become financially unviable for FedLoan over time.
fedloan The Transition Process for Borrowers
As FedLoan Servicing was set to close down, borrowers were moved automatically to new loan servicers. The transition was supposed to be smooth — but some borrowers encountered issues such as missing records, late processing of payments and uncertainty about who their new servicer was.
How to Locate Your New Loan Servicer
If you used to be serviced by MyFedLoan and now need to find your new servicer:
- Go to Federal Student Aid (FSA) Website: Go to studentaid. gov and log in using your FSA ID to find your loan servicer information.
- Contact Federal Student Aid SupportIf you can’t access your account, call the Federal Student Aid Information Center at 1-800-433-3243.
- Check Correspondence: The Education Department and new servicers sent notifications about the transition.
Effect on Public Service Loan Forgiveness (PSLF)
Borowers’ biggest worry was whether the closure of FedLoan would affect PSLF applications. FedLoan was the only servicer dealing with PSLF, so every borrower in the program had their loans transferred.
Steps for PSLF Borrowers
Check Your PSLF Payment Count: After the transition, make sure your qualifying payments have been counted correctly.
- Submit PSLF forms to maintain eligibility: A new servicer does not mean you stop submitting PSLF forms.
- Utilize the PSLF Help Tool: The Department of Education has an online PSLF Help Tool to help borrowers better understand how to track their PSLF applications.
- Watch for Communication From Your New Servicer: Keep an eye out for any updates affecting your PSLF status.
Different Repayment and Forgiveness Options
For borrowers formerly of FedLoan, the Department of Education has a menu of repayment and forgiveness options:
Income Driven Repayment (IDR) Plans
Revised Pay As You Earn (REPAYE): Limited to 10% of discretionary income and forgiveness after 20 or 25 years.
- Pay As You Earn (PAYE): Similar to REPAYE with a stricter eligibility requirement.
- Income-Based Repayment (IBR): Monthly payments restricted to 10-15% of discretionary income, based on when the loan was taken out.
- Income-Contingent Repayment (ICR): The sole IDR plan offered to borrowers who took out Parent PLUS loans.
Loan Forgiveness Programs
- Teacher Loan Forgiveness: For teachers who work in low-income schools for five years in a row.
- Borrower Defense to Repayment: For those borrowers whom their schools misled and deceived.
- Total and Permanent Disability Discharge (TPD): Forgiveness for borrowers who are rendered permanently disabled.
Seamless Transition Common Issues Borrowers Experienced
The handoff from FedLoan to new servicers was not without difficulties. The most-frequent issues were:
- Missing Payment Histories: Some borrowers reported that PSLF counts of payments failed to reflect the payments they made or were not reflected in PSLF counts.
- Repeat Wait Times For Customer Responses: New servicers had long wait times due to high call volume.
- Confusion About Terms for Repayment: Some borrowers discovered their terms for repayment or due dates had changed, often unexpectedly.
- Auto-Payment Snags: Borrowers who had set up auto-payments with FedLoan were forced to re-enroll with their new servicers.
Remedies to Mitigate Transition Problems
- Maintain Loan Paperwork: If you have historical statements or other documents from FedLoan, keep copies.
- Payment Tracker: Track your payments and history regularly by logging in.
- Talk to Your New Servicer: If you see something amiss, contact them right away.
- Pursue the FSA Ombudsman: If unresolved issues remain, you can try mediation through the FSA Ombudsman Group.
fedloan Conclusion
While FedLoan Servicing no longer exists, it still looms large over borrowers of student loans. Essential steps to successfully managing federal student loans include understanding the transition process, verifying loan details, and staying updated about repayment and forgiveness options. Another reminder: Borrowers should actively work with their new servicers, stay on top of their accounts and access available resources. By keeping records and understanding the requirements to qualify for PSLF or other forgiveness programs, borrowers should know how to successfully obtain loan forgiveness.
With a proactive approach and informed decisions, borrowers can explore the post-FedLoan landscape confidently and move towards financial security while managing their student loan responsibilities.
