Without something like FedLoan Servicing, if you want to go to college and get a degree, you’re going to be paying a lot of money for the privilege.
Unless your parents managed to save up to pay for your college tuition, or you won a scholarship, you will have had to apply for a student loan. A majority of the time, it will be with FedLoan Servicing.
The US Department of Education issues you your student loan. They aren’t, however, the ones who collect the student loan repayments from you.
They have a huge workload, and cannot deal with the payments and other services that go with student loans. Instead, they have assigned other companies this job – known as federal loan servicers – who deal with your federal student loans.
What is Student Loan Servicing?
Collecting student loan repayments may sound like an easy task, but there are a lot of students, with a lot of loans.
Wikipedia says that almost 20 million Americans attend college every year. Around 12 million of them are borrowing each year to help with their fees.
Not only that, but a shocking statistic published by Make Lemonade showed that there are more than 44 million people borrowing money for college. The collective amount owed totals around $1.5 trillion!
A student loan servicer is a company who is in charge of handling that debt for you and collecting payments. They also handle other services such as repayment plans and loan consolidation.
How Does FedLoan Servicing Compare to Other Servicers?
The main student loan servicer is a company called FedLoan Servicing. There are other companies that are similar, such as Nelnet and Navient.
FedLoan Servicing collects your student loan repayments, deals with your repayment strategy, consolidation, missing payments, student loan forgiveness, and discharge.
The difference with FedLoan Servicing compared to other servicers is that they help to manage the Public Service Loan Forgiveness (PSLF) program.
The PSLF program is a government-run program. It forgives eligible borrowers for a portion of their student loan debt in exchange for working full-time in a public service job.
To be eligible, you’ll need to be making payments against a federal service loan and work for an eligible profit or non-profit organization.
Your employment generally needs to be with government agencies or organizations, 501(c)(3) organizations (the IRS defines these), or non-profit organizations which provide certain public services.
Best Options to Refinance Your Student Loans
Sofi is a private lender which aims to be a modern personal finance company in that everything they do is online.
You can refinance your student loan with them if you:
- Are a working graduate with a loan that has high interest
- Have unsubsidized Direct Loans or Graduate PLUS Loans
- Borrowed with private loans
Please note that if you refinance a federal loan, any originally-offered benefits may no longer be available. Examples of these benefits include public service loan forgiveness and economic hardship programs.
You are able to consolidate both federal and private student loans with them. Consolidation simply means combining all of your loans into one. Refinancing is where you get a new loan with a new interest rate and term.
They offer low fixed and variable rates (variable APR of 2.47%-6.99%), online application and support, and no hidden fees. You’ll need a credit score of 650+ to qualify to refinance with them.
You can pre-qualify online within 2 minutes, with just a soft credit check which will not show up on your credit report. You can select your rate and term, and if you decide to go ahead, Sofi will consolidate your loan.
They have a 5-star rating on Trustpilot and are also rated 9 out of 10, based on nearly 2000 reviews.
Credible is not a student loan servicer, but they are able to look at all of them for you. They are a service that let you compare loans across a range of providers.
There are no fees for using this service. Your credit score will not be affected by checking the different lenders and rates.
You will need to fill out a simple form with your information, such as desired payment amount, rate, etc. After also providing your loan details, you should get your offer back in one business day.
LendKey is a lending platform and online marketplace where you can get private student loans or refinance existing loans, with local credit unions and community banks.
They have a handy student loan calculator which can help you see how refinancing could help to improve your finances. You can enter your loan amount, interest rate, and monthly student loan payment amount or the remaining term. The next step is to enter your credit score, the new term that you would like, and the loan type.
It’s worth noting that the calculator won’t be 100% exact. You’ll have to send in all of your documentation to get the most accurate rate.
What is FedLoan Servicing?
Problems Reported with FedLoan Servicing
There are many problems that are reported with FedLoan Servicing. If they are your student loan servicer and you don’t check your repayment plan closely, you may be surprised at what you find.
You may not even realize that FedLoan Servicing handles your loan. Since your loan(s) can be moved to different providers without your knowledge, it’s worth checking who holds your account.
If you want to check, you can use the National Student Loan Data System to see the list of providers. You can still use this tool even if you have more than one student loan.
Make sure you check your FedLoan payment, as it may not be correct.
Is FedLoan Servicing a Scam or Legit?
FedLoan Servicing is definitely legit. They were appointed (but not run) by the US government, after all.
There have been many complaints directed towards FedLoan Servicing. In addition, in August 2017 they were sued by the Massachusetts State Attorney General.
FedLoan Servicing was accused of neglecting to properly conduct the handling of the student loans in their care. Additionally, their handling/management of the Public Service Loan Forgiveness and TEACH GrantTeacher Loan Forgiveness programs was brought into question.
They have also been accused of mismanaging the debt in the form of converting grants into loans, adding interest, and preventing people from making required monthly payments to qualify for the federal Public Service Loan Forgiveness Program.
How Can These Problems Affect You?
This could affect you whether or not you are on either of the federal Loan Forgiveness programs. If you haven’t been keeping a close eye on your student loans, a whole host of issues may have developed without your knowledge.
Student loans can transfer between companies, often without your approval, or knowing about it.
Visit the National Student Loan Data System to look at all of your loans, to see who your servicer is.
Unfortunately, there are various problems that FedLoan Servicing have been causing, such as the following:
- Altering your grant to a loan. This is definitely something that you need to check, as you could end up spending a lot of money when you didn’t need to.
- Changing the interest rate. Check the interest rate that you have been paying, and what you had agreed to initially. Does it match up?
- Being put on the wrong payment plans which do not go towards forgiveness.
- Payments not being processed correctly.
- Borrowers being denied forgiveness, when they are in fact eligible.
There are additional things that FedLoan Servicing has been accused of, so it’s highly advisable to double check which provider you are with, the interest rate etc, and if your payments have been processed correctly.
With the Public Service Loan Forgiveness program, you didn’t need to re-apply but would be eligible after 10 years of service.
FedLoan Servicing should be contacting you to let you know about your enrollment – so check in with them if you haven’t heard anything yet if you have served your 10 years.
Managing Your Student Loans With FedLoan
How to make a payment and repay student loans with FedLoan
There are a variety of ways that you can make payments to FedLoan, which are:
- Direct debit
This is a free service, and a great one to make sure that your payments are always on time – as it is set up automatically to do so. Approved direct debit accounts qualify for a 0.25% interest rate reduction.
You will have access to their online management system, called Account Access, where you will be able to make changes such as changing your bank account information, suspend the direct debit service, etc.
In addition to this, there is also the option to make extra payments on your loans.
- Pay online
Using the option of manually paying online means that you have more flexibility over your payments, but it does mean that it is down to you to remember to make your payment.
It allows you to save your bank details for the next time that you use it, and allows you to schedule payments in advance.
- Pay by mobile app
I’d be careful with this one, as there have been a lot of complaints about the Fedloan app. You are able to make payments when you’re out and about, and use your saved bank details to do so.
- Pay by phone
If you want to pay via phone, you can pay on any business day (Monday-Friday), and can select the day that you want the payment to happen, up to 60 days in advance.
Please note that your phone payment will be automatically spread over all of the loans in your account.
- Pay by mail
You can pay by check, and send it to:
Department of Education
P.O. Box 530210
Atlanta, GA 30353-0210
Make sure that you include your account number or social security number on your check. Also, ensure that you postmark your check at least 5-7 days before the due date.
- Pay by third-party bill-pay services
If you wish to pay via third-party bill-pay services, please be aware that they need to have the correct address so that the payment is sent to the right place.
You will also not be able to receive the 0.25% interest reduction that you would get if you paid via direct debit.
- Set up advance payments
Advance payments can be set up via phone or through Account Access – you can schedule up to 8 payments over 60 days (but not over a weekend).
Applying extra payments to your FedLoan student loans
As with any type of debt, making extra payments to get rid of it faster is the best thing for you to do financially – if you can afford to do so.
Before you start throwing a lot of money at your student loan debt, make sure that you know all of the relevant information.
Specifically, take a look at:
- Your loan provider (don’t forget, they are able to move your loan around, without your permission)
- Current loan balance total
- Interest rate
- How long you have been repaying your loan
You will also want to take a look at your budget and verify that you do have enough money to pay extra towards the loan, even if unexpected things come up.
FedLoan has a handy section on their site where you can figure out the best repayment strategy for you. You can select your specific goal and preferred repayment plan.
If you have extra money that you wish to put towards paying off your loans, you are able to target specific loans, e.g. your loan with the highest interest rate, otherwise, the extra money applies across all of your loans.
To make extra payments with FedLoan Servicing, head over to your Account Access, and enter your target amounts for the specific loans that you want to pay off.
Please note, if you do this, you will still have to make at least the minimum amount due for each individual loan, or your account will go past due.
You can keep on making overpayments online as above, but if you want to have any/all extra payments made in the same way in future, you can write to them with the following instructions (via email, mail or fax).
How to contact FedLoan Servicing
If you wish to contact FedLoan Servicing, there are a lot of different options available to you.
FedLoan Phone Number:
FedLoan Ombudsman Hotline (for help with payment, forbearance, bad customer service, etc.)
Toll-Free (Monday-Friday 8am-9pm ET)
International (Monday-Friday 8am-9pm ET)
Hearing and Speech Impaired (Monday-Friday 8am-9pm)
717-720-1628 (for sending documentation)
Mail Check for a payment:
Department of Education
P.O. Box 53021
Atlanta, GA 30353-0210
Completed direct debit forms:
P.O. Box 3661
Harrisburg, PA 17105-3661
Letters and any correspondence:
P.O. Box 69184
Harrisburg, PA 17106-9184
FedLoan Servicing Credit
P.O. Box 60610
Harrisburg, PA 17106-0610
FedLoan Consolidation Department
P.O. Box 69186
Harrisburg, PA 17106-9186
Office of Consumer Advocacy:
Pennsylvania Higher Education Assistance Agency
The Office of Consumer Advocacy
1200 North 7th Street
Harrisburg, PA 17102
Sign in to your FedLoan Servicing account and use Account Access to send an email to them.
Student Loan Repayment Options
In Account Access, you will be able to view your loan information and options that are available to you – click on ‘Repayment Options’.
There are several repayment plans that you can choose from:
Standard Repayment Plan
This is one of the best options, as it gives you the fastest payoff, and there are fixed monthly payments (which make it easy to budget for).
The monthly repayment minimum amount for this plan is $50, per loan program, with the maximum repayment term being 10 years for loans which are not consolidated or 30 years for consolidated loans.
Graduated Repayment Plan
This is another great option, as it gives you the fastest payoff, with lower monthly payments which gradually increase over time.
Although in the beginning, the payments will only cover the interest, so stop to consider this if you really want to pay it off quickly. This can be a good option for those who know they will be coming into more money in the future and just need a hand starting.
Extended Standard Repayment Plan
This is the option for you if you have a LOT of student debt – to qualify for this plan, you will need to have more than $30,000 in outstanding Direct Loans or FFEL Program Loans.
You will pay fixed monthly payments over an extended period of time – it’s up to 25 years as opposed to the Standard Repayment Plan of 10 years. Because of the length of the plan, the monthly payment will be smaller.
Extended Graduated Repayment Plan
The Extended Graduated Repayment Plan is essentially the same as the Extended Standard Repayment Plan, but with the idea that you will be able to pay off more in the future.
Income-Sensitive Repayment Plan
The monthly repayments on this plan are based on your monthly income, but the minimum payments must cover the interest rate every month as a minimum.
There is an extended plan period, with lower monthly payments, but you need to have the FFEL program loan in order to qualify.
The Repayment plan may be extended by 5 years (maximum), and because it is based on your income and this can change, you’ll need to reapply every year.
Repayment Plans Based On Your Income
These plans aren’t just based on your income, but they will also look at your family size, and state that you reside.
This type of plan is good for you if you have a lot of debt, are not sure if you can afford your monthly payments, and only have a small income.
You will need to apply for this loan via StudentLoans.gov – make sure that you have your FSA ID ready, and be aware that you will have to use the IRS Data Retrieval Tool during your application.
FedLoan Solutions: Here Are Your Options
If you want to get rid of FedLoan entirely (and we wouldn’t blame you for that!), you need to first check that it would be sensible for you to do so.
Before you start thinking, hang on – how could it not be sensible to leave them if there are all of these problems…bear in mind that if you are on any of the Student Loan Forgiveness programs, you will no longer be eligible for them if you leave FedLoan.
If you are not on one of those programs, you can look into moving over to another provider.
You may also want to look at whether to refinance your loans or consolidate them. In case you are not sure on that terminology, here is a quick overview:
Consolidation is when you combine lots of loans, into just one loan. The advantage to this method is that it’s easier to keep on top of your loans if they are all in one place.
Refinancing is when you also combine your loans into one – but with a big advantage over consolidation – you can get better rates.
The idea with refinancing is to get a better deal than what you are currently on – specifically the interest rate, which will lead to you paying less over time.
One of the best places to start is with Credible, as mentioned previously. They are not a Servicer, but they will be able to compare Loan Servicers for you, to find the best for your situation.
As mentioned previously in this article, we recommend Sofi, Credible, and LendKey.
Sofi is a private lender, who offer:
- Low fixed and variable rates (variable APR 2.47%-6.99%)
- Application all done online, with support online also
- No hidden fees
- A credit score of 650+
- Free to use
- No hard credit check required
- Compare multiple lenders and rates with one tool
LendKey is one of our other top picks, who offer:
- Fixed rates from 3.49% APR
- Variable rates from 2.51% APR
As with all of your finances, you need to keep track of them and do what is best for you and your budget.
Find out who your Student Loan Servicing company is, and all of the information on your loan – the amount, interest rate, length of term, which repayment plan you are on, etc.
Decide if you want to stay with FedLoan, or if you would be better off refinancing your loans with another company, such as the ones we suggested. Have a look on Credible to see if there are better options available.
You may feel like it’s a lot of hassle and effort – but it will be worth it to check that your loans are getting paid off, and getting paid off as fast as you possibly can. But make sure you check if it’s worth paying off your student loans aggressively (depending on the interest rate).