A Brief History
FedLoan Servicing is one of only four approved loan servicers for all student loans made by the federal government. It currently manages the largest portfolio of federal student loans in the US as well as the government’s Public Service Loan Forgiveness program. The company was originally established as The Pennsylvania Higher Education Assistance Agency (PHEAA) in 1963 and quickly became one of the leading student aid organizations in the US. PHEAA currents services loans for millions of student borrowers and thousands of colleges and ugniversities.Today, PHEAA services student loans through two different entities: American Education Services (AES) and FedLoan Servicing. AES was created to guarantee and service FFELP loans and private student loans made through its lending partners. FedLoan Servicing was created to work with the Department of Education as a primary point of contact to help borrowers manage their federal student loans.
Problems With FedLoans
Once your repayment term begins with Fedloan Servicing, so do the problems. Fedloan Servicing currently has a 97% negative rating on the BBB, has been sued by the state of Massachusetts for failing to help borrowers with their public service loan forgiveness, and has been blasted by the CFPB for mishandling of their borrowers federal student loans. There is a Facebook page set up for Fedloan borrowers to leave their complaints, where they currently have a 1.2 out of 5 stars.
How would you rate the performance of your student loan servicing company? (Navient, Nelnet, Great Lakes, etc…)
— StudentDebtCrisis (@DebtCrisisOrg) April 20, 2017
Fedloans Servicing Handles All Public Service Loan Forgiveness
Currently, all employment certifications for the PSLF program must go through Fedloan Servicing (see section 7 of the PSLF employment certification form). When an individual is relying on one company for their student loan forgiveness, it’s increasingly alarming how that one company can make so many errors. There are many reports of
- Borrowers being put into the wrong payment plans which do not count towards forgiveness
- PSLF Applications being “lost” in the mail
- Borrowers being wrongly denied forgiveness
- Borrowers not being informed that they may qualify for lower monthly payments via the income drive repayment plans
- Borrowers not being told that the 120 qualifying payments for PSLF do NOT need to be consecutive payments
- Borrowers being put into forbearance rather than an income drive repayment plan while out of work and qualifying for a $0.00 monthly payment
- Payments being applied incorrectly
- Customer service reps that do not know the programs well enough to help borrowers, often resulting in a financial harm for the borrower
Since the program started a decade ago, the first recipients of public service loan forgiveness would qualify to begin in October 2017. Fedloan Servicing should be actively contacting its borrowers to inform them of this via email, phone calls, social media, and any other forms possible. To receive PSLF you do not need to pre-apply and are only responsible to apply once after your ten years of service. Millions of people right now qualify for this forgiveness, but is it actually happening?
Changing Your Student Loan Servicer
Thankfully, you have options to change your loan servicer. The easiest way, which also makes your loans eligible for PSLF is to apply for the Direct Loan Consolidation program. It’s a federal program that will take all your student loans, and bundle them into one new loan with a weighted average interest rate. When applying for the consolidation you are able to select which servicer you would like your loans to be sent to between Nelnet, Fedloans, Navient or Great Lakes. There is a caveat, during the application process it will ask if you plan on applying for PSLF and if so your loans will be sent to or stay with Fedloans. If you wish not to have your loans with Fedloans, you shouldn’t select this. Your loans do not need to be with Fedloan Servicing to apply for PSLF. Please read the qualifying payments section 6 of the PSLF certification form. You can apply on your own for a Direct Loan consolidation for free, or you can give us a call and we will connect you with a private organization who can offer assistance for a fee.
Another option is to apply for a private student loan consolidation. This would remove any federal student loan benefits you have and eligibility for income-driven repayment plans and forgiveness programs. If you are unable to take advantage of any of the forgiveness programs offered by federal student loans, then considering a private consolidation could be a smart move. Through a private consolidation, you may benefit from
- Reduced interest rate
- More favorable repayment terms
- Better customer service
In any event, it’s important to consider that there is no one size fits all solution. Each person needs to evaluate their own situation and decide accordingly after researching all their options.
Here’s a brief summary of how FedLoan Servicing works:
- Borrowers apply for a federal student loan. This involves completing a FAFSA application, choosing a school, signing a Master Promissory Note (MPN), and going through entrance counseling before receiving their actual federal loans.
- The school receives the funds and the borrower is assigned a federal loan servicer. At this point, FedLoan Servicing may be assigned as the loan servicer and would then be the primary point of contact going forward. Borrowers will need to set up an account with FedLoan Servicing to manage their loans and make payments after graduation. No student loan payments are due while the borrower is still in school (as long as they are enrolled at least half-time).
- After graduation, borrowers enter a grace period. This is typically a 6-month period where students can complete exit counseling and begin looking for work before their repayment term begins.While payments are not required during this period, FedLoan Servicing encourages borrowers, if possible, to at least pay the accrued interest so it is not added to the principal after their grace period ends. During this period, FedLoan Servicing will send the borrower a Repayment Obligation Letter by mail which details all of their repayment information for the term of their loan.
- The repayment term begins. After the grace period ends, FedLoan Servicing will begin sending borrowers their monthly student loan bills. These are typically sent out several weeks in advance so they can make each payment on time. All payments will be made directly to FedLoan Servicing.
*If a borrower is having trouble making payments at this point, they may be eligible for one of several federal Income-Driven Repayment options currently available.
Once the student loan is paid off completely, FedLoan Servicing will send the borrower a Paid In the Full letter as proof of total repayment.
FedLoan Servicing offers many options to help borrowers with their federal student loans, including:
- Extensive student loan information and resources
- Loan consolidation
- Repayment schedule and estimator tool
- Income-Driven Repayment programs
- Deferment and forbearance options
- Loan forgiveness and discharge programs
- Public Service Loan Forgiveness
- TEACH Grants
- Payment management and billing
- Payment history and tax documents
- Direct debit
- Delinquency and default
- Credit report dispute services
Borrowers can access these services through their account at FedLoan Servicing anytime through their online portal.
Reviews of FedLoan Servicing
BBB Rating: (Not Rated)
Consumer Affairs Rating: 1 star (out of 5)
Lendedu.com Rating: 1.5 stars (out of 5)
For more information, or to speak with someone at FedLoan Servicing directly, you can contact them by email or through the information below:
1200 N 7th St
Harrisburg, PA 17102
Compare the Best Student Loan Refinance Rates
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Student Debt Relief Loan Refinancing Advertiser Disclosure
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
SoFi: Fixed rates from 3.890% APR to 8.074% APR (with AutoPay). Variable rates from 2.550% APR to 7.115% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.550% APR assumes current 1 month LIBOR rate of 2.50% plus 0.04% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.