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The U.S. Department of Education (ED) originates federal student loans, but it doesn’t directly collect student loan payments. The Education Department assigns you a federal student loan servicer, such as FedLoan Servicing, when it disburses your loan. This is the company that you’ll actually be paying.

You’ll also have to deal with your servicer if you have questions about your loans during repayment, want to change repayments plans, or want to place your loans in deferment or forbearance.

What is FedLoan Servicing?

FedLoan Servicing was established by the Pennsylvania Higher Education Assistance Agency (PHEAA) to support the U.S. Department of Education’s ability to service student loans owned by the federal government. Along with Nelnet and Navient, it is one of the big three for-profit federal student loan servicing companies. There was a fourth for-profit servicer, Great Lakes Educational Loan Services Inc., but Nelnet acquired it in February 2018.

There are also several non-profit federal student loan servicing companies, but they only serve a small percentage of borrowers’ loans.

PHEAA conducts its student loan servicing operations for federally-owned loans as FedLoan Servicing. Another arm of PHEAA — AES — guarantees and services a variety of Federal Family Education Loan (FFEL) Program and private student loan products for lending partners.

FedLoan Servicing stands apart from the other federal student loan servicing companies because it was chosen to help manage the Public Service Loan Forgiveness (PSLF) program. Borrowers who submit an Employment Certification form — which the Department of Education advises you do as soon as possible if you’re considering PSLF — will have their federal loans transferred to FedLoan Servicing.

Unfortunately, FedLoan Servicing and MyFedLoan reviews indicate borrowers are sometimes disappointed by the services they receive.

Finding your loan servicer(s)

Your loan servicer may have contacted you after your first loan was sent to your school. But if you’re not sure which company services your loans, you can always find out by logging into the National Student Loan Data System using your FSA ID (which you likely created when you first submitted your FAFSA).

You could also have several federal student loan services. Or, the ED may have transferred your loans from one servicer to another, which it can do without your permission. When this happens, your new servicer should send you a welcome letter with its contact information and steps to get set up with a new account.

Is FedLoan Servicing a Scam or Legitimate?

FedLoan Servicing is one of a limited number of organizations approved by the U.S. Department of Education to service these loans and says it’s dedicated to supporting borrowers with easy and convenient ways to manage their repayments.

Managing your loans with FedLoan Servicing

If the ED assigned FedLoan Servicing to service your federal student loans, you can manage your loans using the MyFedLoan online platform. FedLoan Servicing also has iOS and Android apps that you can use to manage your account on the go. However, the MyFedLoan apps get mixed reviews.

Once you create an account and log in, you can review your loans balances’ and interest rates, make payments online, get a breakdown of your previous payments, track your loan repayment progress, and download loan-related tax forms.

You can also see your payoff amount, which you may need to refinance your loans, and see how many qualified payments you’ve made towards the Public Service Loan Forgiveness program.

Beyond the user accounts, the website has a lot of potentially helpful information, including calculators, quizzes, and guides that can help better understand and compare your student loan repayment options.

There are also more general guides to the student loan process and subsections of the site geared towards borrowers who are in school, in their grace period, or who are repaying their loans. If you’re having trouble making payments, there are pages devoted to discussing your options as well.

FedLoan Servicing has samples of different forms it may send you, such as your bill, with explanations of each part of the form. And you can fill out and submit many forms online, including a request for deferment, direct debit application, or repayment plan selection forms.

However, while the website has a lot of helpful information, the actual service that borrowers receive may not be so great.

Loan Eligibility

FedLoan Servicing services two main types of federal loan programs: FFELP and the William D. Ford Federal Direct Loan Program loans.

FedLoan Servicing services FFELP loans that were sold and transferred as a result of legislation known as the Enduring Continued Access to Student Loans Act (ECASLA), under which the U.S. Department of Education offered to purchase FFELP loans from third-party lenders.

FedLoan also services direct loans provided directly through the U.S. Department of Education and don’t involve third-party lenders.

Consolidation Eligibility

To qualify for a Direct Consolidation that may be serviced by FedLoan Servicing, the borrower must be out of school and have at least one Direct Loan or FFELP loan that is in grace, repayment, deferment, forbearance, or default status. Loans that are in in-school status are not eligible for consolidation.

If a loan is in default, the borrower can only consolidate the loan under two conditions: the borrower must agree to repay the loan under an income-driven repayment plan, or make payment arrangements with the current loan servicer.

Loans that have been consolidated already can also be reconsolidated, but only under specific conditions. See which loans are eligible to be consolidated here.

Consolidation can increase the total repayment period from 10 to up to 30 years, depending on the repayment plan selected by the borrower. The borrower’s new interest rate on the Direct Consolidation Loan is a weighted average of the interest rates of the underlying loans.

Repayment

Unless borrowers choose another option, loans serviced by FedLoan Servicing are enrolled in the standard 10-year repayment plan. All Direct PLUS Loans are also eligible for income-driven repayment except Direct PLUS Loans made to parents.

Note that not all FFEL Program loans are eligible for income-driven repayment. However; some maybe eligible if included in a Direct Consolidation.

FedLoan Servicing offers the following options for repayment, depending on eligibility:

  • Pay As You Earn
  • Income-Based Repayment
  • Income-Contingent Repayment
  • Standard Repayment
  • Graduated Repayment
  • Extended Fixed Repayment
  • Extended Graduated Repayment
  • Income-Sensitive Repayment

FedLoan Servicing borrowers can enroll in Direct Debit, which is a free service that allows for a 0.25 percent interest rate reduction for approved applications that agree to automatic withdraw each month.

Borrowers can also allocate additional funds to loans of their choosing in order to target repayment for faster payoff. Payments can be made online, via smartphone, or by mail.

FedLoan Servicing Reviews

FedLoan Servicing is not accredited by the Better Business Bureau, and the bureau has not rated the company. In the last three years, the BBB has closed 271 complaints against FedLoan Servicing, including 118 in the last 12 months.

Some public reviewers have criticized the company’s customer service as unhelpful and impolite. Others have complained that the FedLoan’s main website is outdated and uninformative.

But other borrowers attest that they have had no issues with FedLoan Servicing, having had a positive experience with loan consolidation.

As the federal loan servicer for the Public Service Loan Forgiveness program, FedLoan Servicing recommends that borrowers who hope to qualify for PSLF submit an Employment Certification form to get early confirmation they are on track for forgiveness.

Borrowers are also advised to submit a new ECF annually. Although as many as 8 million borrowers may qualify for Public Service Loan Forgiveness, as of March 31, 2018, FedLoan Servicing had accepted ECFs submitted by 874,379 borrowers as valid.

The PSLF program provides loan forgiveness to government workers and employees of qualifying nonprofits after they’ve made 120 monthly payments in an income-driven repayment (IDR) plan. But many borrowers who had hoped to qualify for Public Service Loan Forgiveness have been disappointed when they learned that their employment did not qualify them for the program, or that they were in the wrong repayment plan.

FedLoan Servicing is also responsible for monitoring compliance of TEACH grant recipients, whose grants are converted into loans if they do not certify that they are completing their public service requirements. About 30,000 students receive TEACH grants each year, and most end up having their grants converted into loans.

In August 2017, Massachusetts Attorney General Maura Healey sued FedLoan Servicing alleging that the company “prevented student borrowers from making qualifying monthly payments that count towards loan forgiveness, shifting the consequences of its loan servicing failures onto the student borrowers themselves.”

How does FedLoan Servicing compare to other servicers?

MyFedLoan reviews point towards potential trouble for borrowers. One attorney who specializes in student loan cases even calls it “literally the worst,” based on his experience working with federal student loan borrowers who were assigned FedLoan Servicing. He shares anecdotes of clients who were told incorrect information from representatives and who had to wait months before an income-driven repayment (IDR) plan application went through.

These types of delays led the Massachusetts Attorney General Maura Healey to sue FedLoan Servicing’s parent company, PHEAA, in August 2017. The suit alleged that PHEAA overcharged borrowers and mishandled applications for different repayment plans, causing borrowers to fall behind on their progress towards loan forgiveness.

FedLoan Servicing isn’t the only company that faced legal trouble due to their servicing practices. In January 2017, the Consumer Financial Protection Bureau (CFPB) and Attorney Generals from Washington and Illinois sued Navient for what it alleged deceptive and illegal practices.

The ED surveys student loan borrower about their satisfaction with their servicer and compares the repayment rates for each student loan servicer. It uses this data to determine how many loans it will allocate to each company.

Based on the most recent borrower satisfaction survey results from June 2017, FedLoan Servicing had a 65.50%satisfaction rate. Overall, it tied for sixth place out of the nine student loan servicers that were compared. Nelnet was second (behind Great Lakes) with a 70.25%satisfaction rate, and Navient placed last with a 59.25%satisfaction rate.

How to make a payment and repay student loans with FedLoan

You have several options for making student loan payments to FedLoan Servicing.

  • Direct debit. If you sign up for direct debit, FedLoan Servicing can electronically withdraw your payment from your account each month. Using direct debit also lets you qualify for a 0.25%interest rate reduction.After submitting a direct debit application, be sure to continue making payments using another method until FedLoan Servicing verifies the connection (MyFedLoan reviews say this can sometimes take a while). Otherwise, you may wind up missing a payment by accident. Also, if you had direct debit at a different loan servicer and your loans were transferred to FedLoan Servicing, you’ll need to reapply for direct debit.
  • Pay online. You can log in to your MyFedLoan account and schedule a payment. You can also save your bank account’s information to make the process easier in the future. If your due date falls on a weekend, be sure to schedule your payment for the business day before your due date to avoid a late payment.
  • Use the mobile app. You can also schedule payments from the iOS or Android apps. As with online payments, schedule payments early if the due date falls on a holiday.
  • Pay by phone. You can contact FedLoan Servicing at 1-800-699-2908 and schedule a payment for up to 60 days in the future using the automated service. Be sure to have your account number on hand to verify your identity.
  • Pay by mail. Mail a check or money order to the payments address listed below. FedLoan Servicing requests that you put your account number, or Social Security number, on the check. You may want to mail your payment at least five to seven business days before your due date to avoid late payments.
  • Use a third-party bill pay service. You may be able to set up bill pay using your bank account or another third-party payment servicer. Be sure to use the payments address below.

You can also log into your account at MyFedLoan or call FedLoan servicing and schedule up to eight advanced payments. The eight payments must be scheduled to occur on weekdays, and they can be spread out over a 60-day period.

Applying extra payments to your FedLoan student loans

There’s no penalty for prepaying federal or private educational loans. However, if you want to be strategic about paying off your loans, you’ll need to understand how your loan servicer applies your extra payments.

For example, if you don’t specify that you want FedLoan Servicing to apply additional payments to a specific loan, it may distribute a portion of the amount to each of your student loans it’s servicing. Better options may be to have the entire overpayment go towards the loan with the highest interest rate (to save you the most money) or with the lowest balance (to help you pay off one of your loans sooner).

You can email, mail or fax FedLoan Servicing with instructions on how you want it to process all your overpayments. Or, you can schedule a payment online at MyFedLoan and target a specific loan with your payment.

Be aware that if you make additional untargeted payments you may wind up in “paid ahead” status, which can happen because FedLoan Servicing could apply your payments towards a future bill instead of paying down your loan’s current principal balance. When this happens, your future bill may be reduced by how much you paid ahead.

However, even if you have paid ahead status, your direct debit payments will continue as usual. For example, if you’re set up to make $300 monthly direct debits and you pay an additional untargeted payment $300 this month you may not owe anything next month. However, your $300 direct debit will still occur next month as if you hadn’t paid ahead.

The paying ahead page on MyFedLoan offers several examples that may help you understand how your extra payments will affect your loan balances and future bills or debits.

How to contact FedLoan Servicing

FedLoan Servicing has a contact page that lists borrowers FAQs, along with answers. But if you want to reach a representative for help, you can do so in the following ways:

  • Call 1-800-699-2908 (or 717-720-1985 for international callers). The call center is open Monday through Friday from 8 am to 9 pm Eastern time.
  • Sign into your account and send a secure email.
  • You can fax forms to 717-720-1628

The mailing address you should use for FedLoan Servicing address varies depending on what you want to send the company.

You can mail payments to:
Department of Education
FedLoan Servicing
P.O. Box 530210
Atlanta, GA 30353-0210

You can mail a Direct Debit application to:
FedLoan Servicing
P.O. Box 3661
Harrisburg, PA 17105-3661

Letters and correspondence should be addressed to:
FedLoan Servicing
P.O. Box 69184
Harrisburg, PA 17106-9184

Mail credit disputes to:
FedLoan Servicing Credit
P.O. Box 60610
Harrisburg, PA 17106-0610

Consolidation-related letters to:
FedLoan Consolidation Department
P.O. Box 69186
Harrisburg, PA 17106-9186

If you need to contact the Office of Consumer Advocacy:
Pennsylvania Higher Education Assistance Agency
The Office of Consumer Advocacy
1200 North 7th Street
Harrisburg, PA 17102