Introduction
By: [author] Manage student loans, the process can be very overwhelming, especially when we have to face loan servicers. FedLoan Servicing was one of the main federal student loan servicers, tasked with helping borrowers navigate repayment of their federal loans. While FedLoan Servicing does no longer process federal student loans as of 2022, what role it has played, and its transition to other servicers is still crucial for student loan borrowers to understand.
This article will discuss FedLoan Servicing, its background and duties, what the customer experience is like, the transfer of its loans to other servicers, and what student loan borrowers can do instead.
What Was FedLoan Servicing?
FedLoan Servicing was a loan-servicing company owned by the Pennsylvania Higher Education Assistance Agency, or PHEAA. It was created to manage the administration of federal student loans, specifically those issued through the William D. Ford Federal Direct Loan Program.
PHEAA established FedLoan Servicing in 2009 after contract with the U.S. Department of Education to service federal student loans. Its main functions were providing help with repayment of loans, making payments, and administering the Public Service Loan Forgiveness (PSLF) program.
Role and Responsibilities of FedLoan Servicing
FedLoan Servicing had several student loan management functions such as:
- Loan Repayment Assistance — The servicer assisted borrowers in understanding their repayment options, such as income-driven repayment (IDR) plans, deferment, forbearance and loan consolidation.
- Payment Processing – FedLoan received monthly student loan payments to ensure they were properly applied to principal and interest amounts.
- Public Service Loan Forgiveness (PSLF) management – FedLoan was the only servicer managing PSLF applications, tracking eligible payments, and verifying employment eligibility for public service borrowers.
- Loan Consolidation and Refinancing — The servicer helped borrowers consolidate multiple federal loans into one Direct Consolidation Loan, potentially making repayment easier.
- Customer Support – FedLoan offered customer support via phone, email, and online account services, guiding borrowers through their repayment options.
FEDLOAN SERVICING TRANSITION
The U.S. Department of Education announced in July 2021 that FedLoan Servicing had decided not to renew its contract so the loan servicing obligations would be passed on to other loan servicers. That transition started in 2022 and affected millions of borrowers.
Loans once managed by FedLoan Servicing were assigned to:
- MOHELA (Missouri Higher Education Loan Authority) — Was tasked with administering the program that took on the Public Service Loan Forgiveness (PSLF program).
- Aidvantage – Serviced loans previously managed by FedLoan.
- Edfinancial and Nelnet – Also took on shares of FedLoan’s portfolio.
Borrowers received notice of the transfer to their new servicers, as well as guidance on how to establish accounts with their respective servicers to allow them to continue to make payments without interruption.
FAQs: Common Problems For FedLoan Borrowers
FedLoan Servicing was one of the largest student loan servicers, however it faced a lot of challenges and criticism, especially concerning its management of the PSLF (Public Service Loan Forgiveness) program. A few specific complaints included:
- Processing Errors — Numerous borrowers told us that their PSLF applications had been mishandled, and that they had their applications rejected even when they qualified.
- Lack of Transparency — Borrowers frequently had difficulty getting straightforward information about repayment plans, payment tracking, and PSLF eligibility.
- Bad Customer Service – Pain points included slow response times, misinformation, and the inability to reach representatives.
- Inaccurate Payment Counts – Many Public Service Loan Forgiveness (PSLF) applicants realized that their qualifying payments did not match their records which caused major setbacks in their loan forgiveness attempts.
These problems led to FedLoan’s contract not being renewed and caused the Department of Education to move toward other servicers.
How to Identify Your New Student Loan Servicer
We’ve already discussed why it’s important to find your new loan servicer if FedLoan was your previous one. To find out who your current servicer is:
- Go to the Federal Student Aid Website – Sign on at StudentAid. Use your FSA ID to log in at studentaid. gov here to check your loan details and servicer information.
- Check for Email and Mail Notices – The Department of Education and new servicers sent notifications about the loan transfer process.
- Contact Federal Student Aid — If they are not sure, borrowers can call 1-800-4-FED-AID (1-800-433-3243) for help.
What Borrowers Should Do Now That the Transition Is Here
If your loans had been transferred there from FedLoan Servicing, some important steps to take:
- Establish an Account with Your New Servicer — Create an account on the new servicer’s website that allows you to track your loan balance, repayment options and payment history.
- Step 2: Confirm Your Loan Information – Make sure your loan balance, payment schedule, and any PSLF qualifying payments were accurately transferred.
- Update Your Payment Methods — If you had auto-pay set up, make sure to re-establish it with your new servicer to prevent missed payments.
- Monitor Your Credit Report – Make sure that the transfer has not hurt your credit report by checking for errors.
Out of the Box Loan Servicing Solutions
Since FedLoan Servicing will no longer be an option, borrowers will have alternatives for managing their loans efficiently:
- MOHELA, Aidvantage, Edfinancial and Nelnet — Federal loan servicers currently servicing account formerly held by FedLoan.
- Consolidation and Refinancing with Private Lenders — Borrowers in good standing with their credit and income may be able to refinance their federal student loans with private lenders, potentially at lower interest rates.
- Income-Driven Repayment (IDR) Plans – REPAYE, PAYE, IBR, and ICR are plans that make monthly payments more affordable based on income.
- Programs for Student Loan Forgiveness – Borrowers working in public service or qualifying non-profit positions may still be eligible if PSLF is offered through MOHELA.
- Deferment and Forbearance Options — Borrowers who are suffering financial difficulties may be eligible for temporary relief from making payments.
Conclusion
While FedLoan Servicing no longer services federal student loans, its reverberations in the world of federal loan servicing and public service loan forgiveness or PSLF administration lives on through borrowers today. The change to new servicers was substantial, and borrowers should make sure they know who their new servicers are, how repayment will work and their loan forgiveness eligibility.
For borrowers of student loans, keeping up with servicer changes, staying educated on repayment tactics, and taking proactive measures in repayment strategy will become important in mapping their financial future out. Use only official government resources, such as StudentAid. gov for accurate and updated loan information.
If you are impacted by FedLoan’s transition, or if you are just looking for better repayment options, knowing what your servicer is and what programs are available can help you make informed decisions about your student loan debt.
