FedLoan Servicing to Discontinue Service of Federal Student Loans
FedLoan Servicing Agency, also known as the Pennsylvania Higher Education Assistance Agency, announced recently that it will stop servicing student loans by not renewing its 12 year contract with the U.S. Department of Education. The current contract expires on December 14, 2021.
Here’s what borrowers need to know about this change:
FedLoan Servicing has agreed to continue working with the Office of Federal Student Aid until all of its borrowers are transitioned to a different servicer. The Office of Federal Student Aid will oversee this transition to different service providers. FedLoan Servicing said it is making this change in an effort to “refocus on our core mission for the Commonwealth of Pennsylvania.”
8.5 million student loan borrowers, or 20% of all federal student loan borrowers currently work with FedLoan Servicing and will be affected by this change. The Agency is also the sole student loan servicer for the Public Service Loan Forgiveness (PSLF) program. This program assists student loan borrowers in earning loan cancellation by working for a qualified public service or non-profit employer for 10 years, or after making 120 monthly qualified payments on their loans.
Currently, the Biden administration is working on helping student loan borrowers get student loan cancellation under existing programs, as well as simplifying the student loan repayment system. The U.S. Department of Education, has made no announcements as to which student loan servicer will take over servicing existing federal student loans or manage the PSLF program.
Starting October 1st, the temporary student loan forbearance ends, and regular payments will continue. As a student loan borrower, plan on reinstating your loan payments. If enrolled in the Public Student Loan Forgiveness program, experts suggest keeping a record or spreadsheet of all payments, dates, repayment plans, and the jobs you have that are eligible for PSLF.
If FedLoan Servicing is your current servicer, you will be provided with a new student loan servicer by December. As a borrower, it is your job to check and make sure that your new servicer has all the correct information. If any questions, speak with a financial advisor that understands the ins and outs of student loan repayment options.