FedLoan Servicing: What Student Loan Borrowers Should Know

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FedLoan Servicing is one of the federal student loan servicer hired by the Department of Education to service student loans. If your loans are with FedLoan, then your loans are federal. Here's what to know about this loan servicer.

What is FedLoan Servicing

FedLoan Servicing is a company created by the nonprofit Pennsylvania Higher Education Assistance Agency (PHEAA) to service student loans owned by the federal government. PHEAA also operates American Education Service (AES), which services both federal loans and private loans.

FedLoan is the only federal loan servicer that handles applications under the Public Service Loan Forgiveness Program.

  • Is FedLoan Servicing legit? FedLoan Servicing is legit. They are one of several federal student loan servicers authorized by the Department of Education to help student loan borrowers manage their education debt.
  • Is FedLoan Servicing a lender? FedLoan Servicing is not a private lender. It does not extend loans to borrowers. It does not buy loans. It simply handles student loan servicing actions for loans sent to it by the Department of Education.
  • Is FedLoan Servicing a government agency? FedLoan is not a government agency. But when faced with lawsuits, FedLoan has argued it is entitled to derivative sovereign immunity.
  • What types of student loans does FedLoan service? Unlike Navient, which services federal loans and private student loans, FedLoan services federal student loans only. It does not service private student loans. So if your loans are with FedLoan, then your loans are federal.
  • Why does FedLoan report to credit bureaus? Although FedLoan does not own your loans, they manage your loans on the government's behalf. One of their tasks is reporting late payments to the credit bureaus. FedLoan will notify the bureaus to add late payments to your credit report after you miss 90 days of required monthly payments. If your late payment was by mistake, you could ask FedLoan if it will remove late payments from your report.

How do I know if FedLoan Servicing is my servicer?

You have three ways to find out if FedLoan Servicing is your loan servicer:

  1. Call FedLoan. 800-699-2908. You can provide your SSN, and the representative will let you know if FedLoan is servicing any of your loans.
  2. Call Federal Student Aid Information Center. 800-433-3243. You can provide your SSN, and the representative will let you know if FedLoan is servicing any of your loans.
  3. Visit studentaid.gov. This website replaced the National Student Loan Data System, which stores information about your federal student aid history. You'll need a Federal Student Aid ID to log in. Once logged in, you'll be able to see which company (e.g., Great Lakes, Navient, Nelnet, etc.) is servicing your loans.

What type of loans does FedLoan service?

FedLoan services loans made under the Direct Loan Program and the Federal Family Education Loan Program. This includes:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct Parent Plus Loans
  • Direct Consolidation Loans
  • Direct Graduate Plus Loans
  • FFEL Loans
  • FFEL Stafford Loans
  • FFELConsolidation Loans

FedLoan doesn't typically service loans made under the Federal Perkins Loan Program. It also does not service private student loans.

Note. If you have FFEL Program Loans with FedLoan and are pursuing the Public Service Loan Forgiveness Program, you will need to consolidate your FFEL Loans. Otherwise, the FFEL Loan won't meet the eligibility requirements for the PSLF Program.

What FedLoan does

  • Explain repayment options: offered by the federal government. Borrowers seeking to pay off their loans quickly should choose the Standard Repayment Plan. Borrowers seeking loan forgiveness or need affordable monthly payments should choose a student loan repayment option based on their income. And borrowers who have high balances and are buying a home with an FHA mortgage will likely choose the Extended, Graduated, or Standard Plan.
  • Determine discretionary income: for borrowers in income-driven repayment plans. FedLoan determines your discretionary income by looking at your adjusted gross income, family size, and the IDR plan you chose (IBR, REPAYE, etc.).
  • Process student loan consolidation applications: for borrowers who are in default, seeking to qualify for student loan forgiveness, or who are seeking a lower monthly payment under a different repayment plan, etc.
  • Monitor progress towards PSLF: for public service workers who are seeking 10-year student loan forgiveness. FedLoan processes the PSLF Employment Certification Form and IDR Plan recertification documents those borrowers submit annually and lets them know how many credits they've earned towards the required 120 qualified payments.
  • Monitor progress towards IDR Plan forgiveness: for all borrowers repaying their loans under one of the income-driven repayment plans. Those plans promise loan forgiveness after 20 to 25 years of monthly payments.
  • Process deferment and forbearance requests: for borrowers who need to temporarily stop making payments. However, borrowers who need to stop making payments due to a loss in income should explore an income-driven repayment plan before they accept a forbearance. The IDR Plans allow monthly payments of $0 for eligible borrowers.

What FedLoan does not do

  • Buy loans. FedLoan did not buy your loans. If your loans were with another company before FedLoan, that means the Department of Education assigned (sent) your loans to FedLoan to be your new loan servicer.
  • Service private student loans. FedLoan only services federal student loan debt. It does not service private student loans.
  • Service defaulted student loan debt. Once you default, FedLoan will send your loans to the Default Resolution Group. From there, the DRG will handle the collection activities itself, or it will transfer your loans to a private collection agency.
  • Negotiate settlements. FedLoan does not offer settlements. They will not accept any settlement offer you provide. The only way you can settle federal student loan debt is if you default on your loans. If you default on your federal loans, your loans will be sent to the Default Resolution Group. Once there, you can negotiate a settlement.
  • Lower interest rate. Aside from lowering your interest rate by 0.25% by enrolling you in direct debit autopay, FedLoan does not have the authority to lower your interest rate. Consolidation typically does not reduce your interest rate. Instead, your new interest rate is the weighted average of the interest rate you included in your consolidation application.
  • Waive interest and collection fees. FedLoan cannot waive the interest that has accrued on your loan balance. Nor can they waive any collection fees that have been added. Typically, the only way you can get either of those lowered is if you default and negotiate a federal student loan settlement.

Payment options

  • Mail: Borrowers can make a loan payment by writing a check or money order payable to FedLoan Servicing and mailing it to Department of Education, FedLoan Servicing, P.O. Box 790234, St. Louis, MO 63179-0234. Include your account number on your check. FedLoan recommends dropping your check in the mail at least five to seven days before the due date to ensure that it's processed on time.
  • Phone: You can make a payment over the phone anytime by calling 800-699-2908. You'll need either your 10-digit FedLoan Servicing account number or SSN to make the payment.
  • Web: After you create an online account at myfedloan.org, you can schedule payments online. There is no service charge for making payments online.
  • Mobile App: FedLoan has apps available for both iOs and Android devices. After you've downloaded the app, you'll be able to manage your student loan account and schedule future student loan payments. You'll also be able to see a copy of your payment history.

Extra payments

You can target extra payments for specific loans, but you have to pay the minimum amount due on each loan. The easiest way I've found to make extra payments is by paying online or through the app. The payment screen allows you to choose the specific loans you want to make the extra payment towards.

How do you get rid of FedLoan?

If you're unhappy with FedLoan, you have other choices. But in order to move your loans to a new servicer, you'll need to consolidate or refinance. Unfortunately, both of those options have their drawbacks.

  • Consolidation: pays off the loans included in the consolidation application. It gives you an interest rate based on the weighted average of the interest rate for the loans included in the application. Consolidation also adds the outstanding accrued interest to your principal balance. Consequently, you'll be paying interest on top of interest with your new loan.
  • Refinance: allows you to get a competitive interest rate from a private lender based on your credit score and income. Refinancing your federal loans with a private lender causes you to lose federal benefits like income-based repayment options, student loan forgiveness, and deferments and forbearances.

Are my loans stuck with FedLoan?

The Department of Education sometimes moves loans from one servicer to another based on performance and contracts. The department is overhauling its servicing platform, following announcements from FedLoan and Navient that the companies were calling it quits on federal student loan servicing. The departures will cause more than 15 million borrowers to move to new servicers — a process that hasn’t in the past always gone smoothly.

Here are two things you can do to minimize errors with your account:

  • Download your payment history from your online account or ask your servicer to mail you a copy.
  • Update your contact information with your most recent address, phone number, and email address.

You’ll be notified before your loans are moved to or from FedLoan. Despite the changes, your student loan repayment options and forgiveness will remain the same with the new servicer. But the quality of customer service may be different.

If you’re dissatisfied with FedLoan’s performance, you can move your loans to a new servicer by consolidating at studentaid.gov.

Federal student loan servicers:

Learn More: How to Legally Remove Student Loans From Credit Report

FedLoan Servicing: The Future

The Department of Education renewed FedLoan Servicing's student loan servicing contract through December 2022. However, FedLoan isn't one of the servicers the Department of Education will partner with starting in the near future as part of its new NextGen platform.

When the NextGen platform is activated, your loan may be transferred from FedLoan to a new loan servicer. If that happens, download your payment history and account letters from FedLoan before the transfer occurs. You may need those records to prove you've met the eligibility requirements for loan forgiveness programs.

Note: The Education Department recently announced that MOHELA will take over the processing of PSLF applications in 2022. All borrowers currently in the program will remain with FedLoan Servicing until they are transferred to MOHELA later this year.

FedLoan Contact Information

  • Web: https://myfedloan.org
  • Phone: 800-699-2908
  • Customer service hours: Monday - Friday, 8am-9pm E.T.
  • Fax: 717-720-1628
  • Mail: FedLoan has different addresses you should use depending on why you're contacting them. The main address for general correspondence is FedLoan Servicing, P.O. Box 69184, Harrisburg, PA 17106-9184. Check their contact page for their other addresses.

Complaints and Credit Disputes

How to report issues with FedLoan Servicing:

  • PHEAA Office of Consumer Advocacy: 800-213-9827. The Office of Consumer Advocacy is FedLoan's highest customer service office.
  • Federal Student Aid Ombudsman: 877-557-2575 or by mail at U.S. Department of Education, FSA Ombudsman Group, P.O. Box 1843, Monticello, KY 42633
  • FSA Feedback Center: You can submit a complaint to the Feedback Center after you've worked with the Ombudsman group.
  • Consumer Financial Protection Bureau: If all else fails, you can also submit a complaint to the CFPB. They are a third-party government agency that helps consumers solve issues with financial products, including student loans.

Having trouble with FedLoan Servicing? Let's talk.

If you have complaints about your experience with FedLoan Servicing, you're not alone. Unfortunately, they are one of the most complained about federal loan servicers.

Over the years, I've helped borrowers just like you get accurate reporting of the credits they've earned towards PSLF and lower monthly payments. Schedule a free 10-minute call with me to figure out if I can help you using my years of legal experience as a student loan lawyer.

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