FedLoan Servicing: Everything You Need to Know
Learn all about FedLoan Servicing, its role in managing federal student loans, what happened to it, and how you can manage your loans now. Get a complete guide on the services they offered and what to do next.
FedLoan Servicing was one of the primary loan servicers for federal student loans, helping borrowers manage their loans and navigate repayment options. However, as of 2022, FedLoan Servicing has ended its contract with the U.S. Department of Education, and borrowers have been transitioned to other loan servicers.
In this article, we’ll explore what FedLoan Servicing was, its functions, why it’s no longer in operation, and what steps you need to take if your loans were transferred to a new servicer.
What Is FedLoan Servicing?
FedLoan Servicing was a loan servicer contracted by the U.S. Department of Education to manage federal student loans. Loan servicers are companies that handle the administrative tasks associated with student loans. These tasks include:
- Processing loan payments
- Managing repayment plans
- Providing customer support
- Assisting with loan forgiveness programs like PSLF (Public Service Loan Forgiveness)
FedLoan was particularly known for managing the Public Service Loan Forgiveness (PSLF) Program. It played a vital role in helping borrowers who worked in qualifying public service jobs manage their loans and navigate the complexities of loan forgiveness.
Why Is FedLoan Servicing No Longer Active?
As of December 2022, FedLoan Servicing stopped servicing federal student loans. This change was part of the Department of Education’s decision to transfer all loan servicing duties to other companies.
The primary reasons for this transition include:
- Changes in the loan servicing structure: The Department of Education decided to restructure its contracts to ensure better services for borrowers.
- Performance evaluations: The federal government reviews its loan servicing contracts periodically. Due to various factors, including complaints from borrowers, the decision was made to end FedLoan Servicing’s contract.
Although FedLoan no longer manages federal student loans, it continues to exist for certain purposes, such as helping borrowers with records related to the loans that were previously serviced under them.
How Did FedLoan Servicing Help Borrowers?
FedLoan Servicing provided a variety of essential services for federal student loan borrowers:
Repayment Plans
FedLoan offered different repayment options, making it easier for borrowers to choose a plan based on their financial situation. These included:
- Standard Repayment Plan: Fixed monthly payments for 10 years.
- Graduated Repayment Plan: Payments start low and increase every two years.
- Income-Driven Repayment Plans (IDR): Payments based on income and family size, including options like Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE).
These options were designed to help borrowers manage their monthly payments based on their income and other factors.
Public Service Loan Forgiveness (PSLF)
One of the biggest benefits for many borrowers was the PSLF Program, which aimed to forgive student loan debt for borrowers who worked in qualifying public service jobs for 10 years while making qualifying monthly payments. FedLoan Servicing helped borrowers track their progress toward loan forgiveness under this program.
TEACH Grants
FedLoan also administered the TEACH Grant program, which provides financial assistance to students pursuing a career in teaching. Recipients of the TEACH Grant were required to teach in low-income schools to fulfill service requirements, after which the grant could be converted into a loan if the requirements were not met.
Loan Consolidation and Rehabilitation
For borrowers who struggled to manage their loans, FedLoan offered loan consolidation services. This allowed borrowers to combine multiple loans into one, potentially lowering their monthly payments. Loan rehabilitation was also an option for borrowers who had fallen behind on payments.
What Happens Now That FedLoan Servicing Is No Longer Active?
If you were a borrower with FedLoan Servicing, your loans have now been transferred to other servicers. Here are the steps you should take next:
Identify Your New Loan Servicer
Visit the StudentAid.gov website and log in to your account to find out who your new loan servicer is. The Department of Education has transferred loans to several other servicers, including:
- MOHELA
- Edfinancial
- Aidvantage
- Nelnet
You will need to log in to your new servicer’s portal to manage your loans.
Update Your Contact Information
Make sure your new loan servicer has your correct contact information, including your mailing address, phone number, and email. This will ensure that you receive important notifications about your loans.
Review Your Loan Repayment Plan
Your repayment plan and terms should remain the same after the transfer, but it’s a good idea to review your loan details with your new servicer. If you were enrolled in an income-driven repayment plan or PSLF, make sure the new servicer has all the necessary information to continue processing your payments and tracking your progress toward loan forgiveness.
Common Issues and How to Resolve Them
Trouble Accessing Your Account
If you’re having trouble accessing your account with your new servicer, contact their customer support team. Be sure to have your loan information and personal details ready for verification.
Confusion Over Loan Forgiveness Status
If you were enrolled in the PSLF program, it’s important to track your progress to ensure that your payments are still being counted toward forgiveness. Use the PSLF Help Tool on StudentAid.gov to check your status.
Payment Processing Issues
If you notice discrepancies in your payment history, contact your new servicer for assistance. Keep records of all communications, including emails and phone calls, for reference.
Conclusion
FedLoan Servicing was an important player in the federal student loan servicing landscape, particularly for those seeking loan forgiveness through PSLF. Although it is no longer in operation, borrowers can still manage their loans through their new servicer. By staying informed about your loan details and repayment options, you can ensure that your student loan management continues smoothly.