FedLoan Servicing is a company that handles federal student loan repayment. It provides a variety of tools to help borrowers manage their payments, including calculators and online account management. It also offers a mobile app. Its website also allows borrowers to make advance payments and target extra payments toward specific loans. Borrowers can also pay via direct debit or phone or third-party bill-pay services.
The company was established in 2009 by the Pennsylvania Higher Education Assistance Agency (PHEAA). Its primary responsibility is to service federal government-owned student loans. It has a strong focus on helping borrowers understand their options for loan forgiveness and discharge and has partnered with many schools to provide them with resources to educate students and financial aid officers about these programs.
FedLoan Servicing is currently the only service that processes employment certification forms for borrowers pursuing Public Service Loan Forgiveness. However, its government contract expired in December 2022, and all of its loans have been transferred to other servicers such as MOHELA, Edfinancial, Aidvantage, and Nelnet. As a result, borrowers should expect to receive information about their new servicer shortly.
What Happened to FedLoan Servicing?
Until recently, FedLoan Servicing was one of the largest student loan servicers in the country. It managed billions of dollars in federal student loans for millions of people across the country and was also responsible for handling Public Service Loan Forgiveness applications. But earlier this year, the company announced it would not renew its contract with the Department of Education and instead transfer its 8.5 million loan portfolio to other companies.
The transfer process began last fall and has now been completed for many of the borrowers FedLoan served. Other servicers will take over for remaining loans in early 2022, including MOHELA, Navient, and EdFinancial. These new servicers will use the same COMPASS software that PHEAA used, so most borrowers will likely not notice any difference once their accounts are transferred.
However, if you’re one of the 8.5 million people whose loans were transferred from FedLoan Servicing to another servicer, you should know a few things. For starters, it’s important to keep meticulous records of any conversations you have with your servicer and any paperwork related to your loans. This will help you in case your servicer transfers to a different company again.
Fedloan Servicing PSLF
FedLoan Servicing has been the target of many complaints from borrowers, especially over its handling of Public Service Loan Forgiveness (PSLF) applications and credit reporting. The company has been accused of making mistakes that cost borrowers money and caused them to lose months in eligibility for PSLF.
But despite the bad press, the servicer has a good track record with other repayment plans, such as income-driven plans where your monthly payment is capped at a percentage of your discretionary income and can be forgiven after 20 or 25 years. And it offers other options, like extending your loan term and switching to a lower interest rate.