FedLoan is no longer handling federal student loans: Here’s what to know

FedLoan Servicing, one of the nation’s largest federal student loan servicers, ended its contract with the Department of Education in 2021. As a result, millions of student loan borrowers were transferred to a new servicer. Though balances and terms should remain the same, borrowers should keep a close eye on their student loan accounts to avoid issues.

What happened to FedLoan Servicing?

On December 14, 2021, the Pennsylvania Higher Education Assistance Agency (PHEAA), also known as FedLoan Servicing, ended its contract with the Department of Education.

The reason behind this, according to the former servicer’s statement to the National Association of Student Financial Aid Administrators (NASFAA) is to “focus more on its work in Pennsylvania.” The former servicer also hinted at issues regarding the complexity of the federal student loan program and its growing costs as part of its decision.

Where did FedLoan student loan accounts go?

As a result of FedLoan’s decision, its student loan accounts were transferred among these four servicers:

• MOHELA
• Edfinancial
• Aidvantage (formerly Navient)
• Nelnet.

The transfer was completed in 2023. Borrowers can find information about their current servicer by logging into their National Student Loan Data System (NSLDS) accounts. Additionally, they can contact the Federal Student Aid Information Center at 800-433-3243 or check their credit reports to find out who their new servicer is.

What happened to Public Service Loan Forgiveness and TEACH Grants?

FedLoan was responsible for managing Public Service Loan Forgiveness (PSLF) applications, employment certification forms and administered TEACH Grants.

The Department of Education announced that MOHELA would be the new servicer for participants in those programs. If you previously used autopay with FedLoan, the information will automatically transfer. Borrowers won’t have to re-enroll in autopay.

What should you do if you had problems with FedLoan?

FedLoan Servicing has been at the center of several controversies over the last few years. Notably, its mismanagement of PSLF loan accounts has led to 99 percent of all applicants being rejected. The company has allegedly provided inconsistent information to borrowers and hasn’t informed them about their right to appeal mistakes. The company also has a history of converting TEACH Grants to loans (with interest) for minor clerical errors and paperwork delays.

If you had unresolved complaints with FedLoan before your loan was transferred or something has gone wrong in the process, contact the customer service of your current loan servicer.

If customer service can’t resolve your issue, you can contact your state attorney general’s office or state consumer protection office. Take notes on any phone calls you have about your student loans and keep copies of letters, bills or emails about your account.

The Department of Education also created a PSLF Help Tool to ensure borrowers get the correct information. With the tool, you can search for qualifying employers, learn what you need to do to become eligible for loan forgiveness and find the correct forms you need.

How do I make my student loan payments if my loan has been transferred?

You will not make future payments to FedLoan. Instead, look into your new loan servicer for the details about how to make payments.

The bottom line

If FedLoan Servicing serviced your student loan, the loan has been transferred to another loan servicer. Student loan interest rates, repayment terms and account balances should remain the same on any existing accounts. For borrowers in need of assistance should contact the Federal Student Aid Information Center for steps to follow.