If you’ve taken out federal student loans to finance your education (like I did) and you have FedLoan Servicing as your loan servicer, you need to take stock of where you stand with respect to your loans and learn about your repayment options. This is critical if you want to put your best “financial” foot forward and be in control of your student loans.

Here’s what you need to know to manage your FedLoan student loans.

1. What is FedLoan Servicing?

The U.S. Department of Education is your lender, but federal loans are serviced by loan servicing organizations/companies assigned to help the government manage the billing and other services for your loan.

FedLoan Servicing is one of the largest student loan servicers. It is an organization established by the Pennsylvania Higher Education Assistance Agency (PHEAA) to help service federal student loans. While there are eight other loan servicers, FedLoan is the only one authorized to help manage the Public Service Loan Forgiveness (PSLF) and the Teacher Education Assistance for College and Higher Education (TEACH) Grant programs.

NOTE: PHEAA did not renew its contract with the Department of Education when its contract ended on December 14, 2021. Federal loans serviced by FedLoan Servicing are being transferred to MOHELA, Edfinancial, and Nelnet. Be on the lookout for notices regarding the transition. 

You could have more than one loan servicer if you have multiple loans. To confirm, check the National Student Loan Data System.

2. What do you need to do to manage your FedLoan loans?

If you haven’t already set up an online account with FedLoan, you should create one immediately.

The process is easy when you use its online platform MyFedLoan. Go to the “Create an Account” page and fill in the required information, including your name, email address, birthdate, and FedLoan account number or social security number.

You can also create an account using its mobile Android or iOs app. Reviews of the app on both Google Play and App Store have improved in the past year: 4.6 stars for Android and 4.7 stars for iOS in January 2020, compared to 2.8 stars for Android and 2.2 stars for iOS in January 2019.

Once you’ve set up an account, or if you already have an online account, you can log in via the “Account Access” box.

This online portal makes it easy for you to review and manage your account. You can:

• Get your loan balances;
• See the interest rates being charged;
• Make your payments; and
• Update your personal information.

You can also get other helpful information on the website, broken down into loan basics, where you are in the loan process (still in school, in the 6-month grace period, or in repayment period), or have trouble paying.

3. What if you have a question and need to contact FedLoan?

You can phone, email and/or mail/fax FedLoan.

• Phone

Toll-Free	1-800-699-2908 Mon-Fri 8:00 AM to 9:00 PM (ET)
International	717-720-1985 Mon-Fri 8:00 AM to 9:00 PM (ET)
TTY #	Dial 711– support for hearing and speech-impaired callers Mon-Fri 8:00 AM to 9:00 PM (ET)

• Email: Log into your Account Access to send a secure email.
• Mail or Fax

Fax #:   Returning/verifying documents	717-720-1628
Mailing Addresses:
Payments	Department of Education FedLoan Servicing P.O. Box 530210 Atlanta, GA 30353-0210
Completed Direct Debit application forms	FedLoan Servicing P.O. Box 3661 Harrisburg, PA 17105-3661
Letters & correspondence	FedLoan Servicing P.O. Box 69184 Harrisburg, PA 17106-9184
Credit Disputes	FedLoan Servicing Credit P.O. Box 60610 Harrisburg, PA 17106-0610
Consolidation related letters & correspondence	FedLoan Consolidation Department P.O. Box 69186 Harrisburg, PA 17106-9186
Contact Office of Consumer Advocacy	Pennsylvania Higher Education Assistance Agency The Office of Consumer Advocacy 1200 North 7th Street Harrisburg, PA 17102

4. What if you have a problem with FedLoan?

While FedLoan is one of the biggest loan servicers, it is not without its problems. In the Consumer Financial Protection Bureau report issued in October 2019, FedLoan’s parent company PHEAA ranked second highest in both federal student loan complaints (1,658) and private student loan complaints (180) for the 12 months starting on September 1, 2018 and ending on August 31, 2019.

In March 2019, a class action lawsuit was filed against FedLoan’s parent company PHEAA and another loan servicer for allegedly violating consumer protection and other laws in connection with the federal Public Service Loan Forgiveness program.

FedLoan’s parent company PHEAA was also sued by Massachusetts’ attorney general in August 2017, allegedly for mishandling the federal student loan forgiveness programs.

PHEAA has denied the allegations.

“PHEAA remains committed to appropriately resolving any outstanding borrower issues while following the U.S. Department of Education’s policies, procedures and regulations as mandated by the Agency’s federal contracts,” PHEAA spokesman Keith New said in a statement.

In addition, NPR has reported that many teachers have complained that “FedLoan converted their [TEACH] grants to loans even as they were meeting the program’s service requirements — teaching a high-need subject in a low-income school.”

So, what should you do if you have questions, concerns or issues with loans serviced by FedLoan?

Contact FedLoan right away by phone, email and/or mail/fax, using the contact list above.

If FedLoan cannot or does not resolve your problem, or you disagree with the resolution, you should contact the Federal Student Aid Ombudsman Group. You can also file a complaint with Federal Student Aid and/or the Consumer Financial Protection Bureau.

At all times, it would help if you have identified the nature of your loan problem and have documented all the details, including notes of phone conversations, identity of FedLoan representatives etc.

5. What is the best way to deal effectively with FedLoan?

The Department of Education has provided several tips on this, including keeping careful notes of conversations, following up in writing after a conversation, keeping copies of correspondence and replies sent by mail, sending letters by certified mail, and more.

6. What are the payment methods?

You can make your FedLoan payments in many ways, including by direct debit and by mail. Before you proceed, know that you can choose a payment date that works best for you.

• If you choose Direct Debit, your loan payments will be automatically deducted from your checking or savings account on your due date each month, even if your due date falls on a weekend or holiday. But you will save 0.25% using this method. To avoid missing a payment, be sure to send a payment using other methods until FedLoan confirms you are set up for Direct Debit.
• Paying online through Account Access is the most flexible option since it allows you to make extra payments on individual loans. Make sure you schedule your payment for a business day, even if your payment falls on a weekend.
• Payment by mobile app gives you the option to make payments on the go. Be sure to schedule your payment for a business day, even if your payment falls on a weekend.
• You can also pay by phone 24/7 by calling 1-800-699-2908. You will need your 10-digit account number and birthdate to use the automated phone system.
• If you prefer to send your payment by mail, make your check or money order payable to FedLoan Servicing. Be sure to include your account number, or social security number (if you don’t have the account number), on the check or money order. Mail it to the designated address for payment (see contact list above). Your payment should be mailed at least 5-7 business days before your due date to ensure receipt by due date.
• For payment by third-party bill-pay services, be sure that they have the correct mailing address (same as for payment by mail above). The downside of using this method is that you will still need to contact FedLoan directly if you have additional instructions.
• In addition, you can schedule up to eight advance payments within a 60-day period either by logging into your account or by phone. The caveat: be sure you will have the money to cover those payments.

When FedLoan receives a payment, it is applied first to outstanding interest and late fees, if any, and then to the principal balance.

7. Should you make extra payments?

If you have extra money, the answer is definitely YES. This will help you pay off your loans faster and save you money.

Extra payments are automatically applied first to outstanding interest, if any, and then to the principal balance.

For maximum benefit, though, you should target the extra payments to unsubsidized loans, loans with high balances, or loans with higher interest rates — whichever will save you more money in the long run.

You can make extra payments on individual loans online or by writing to FedLoan with instructions to apply the extra payments to specific loans.

8. What are your repayment options?

Although you make your payments to FedLoan, it is the Department of Education that provides the repayment options. Your options may vary by the type of loan you have.

Here are the standard repayment options:

• Standard Repayment Plan: This plan saves you the most money because it allows you to pay off your loan most quickly — within 10 years if you have unconsolidated loans, and within 10-30 years if you have consolidated loans. However, since the fixed monthly payments are higher, this is not a viable option for borrowers seeking PSLF. By the way, this will be your default option if you don’t choose a repayment plan.
• Graduated Repayment Plan: With this plan, you will start with low monthly payments that will increase every two years. You pay off your loan within 10 years if you have unconsolidated loans, and within 10-30 years if you have consolidated loans. This plan may be a good fit for borrowers whose current income is low but expect an increase over time. It’s generally not an option for those seeking PSLF.
• Extended Fixed Repayment Plan: If you need to lower their monthly payments, this plan gives you the option to extend your payment period up to 25 years. You will have a fixed monthly payment. To qualify, your outstanding loan amounts must be more than $30,000. This plan is not an option for those seeking PSLF.
• Extended Graduated Repayment Plan: This plan also gives you the option to extend your payment period up to 25 years, but your lower monthly payments increase over time. To qualify, your outstanding loan amounts must be more than $30,000. This plan is not an option for those seeking PSLF.

If your income is lower than your debt, however, you have the option to choose from four income-driven repayment plans (IDR).Your payments would be based on a percentage of your discretionary income. The percentage varies based on the plan. Payments for all four IDR plans are recalculated each year and are based on your updated income and family size, so you must update your income and family size each year (even if there are no changes). IDR plans are good options for those seeking PSLF, which forgives the remaining balance on Direct Loans after borrowers have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

• Revised Pay As You Earn Repayment Plan (REPAYE) Income Sensitive Repayment: Your monthly payments are generally 10% of your discretionary income. If you haven’t paid back your undergraduate loans in full after 20 years, or your graduate or professional study loans after 25 years, the outstanding balance will be forgiven, but you may have to pay taxes on the amount forgiven.
• Pay As You Earn Repayment Plan (PAYE): Your monthly payments will be 10% of discretionary income, but will not exceed what you would have paid under the 10-year Standard Repayment Plan. If you haven’t paid back your loan in full after 20 years, the outstanding balance will be forgiven, but you may have to pay taxes on the amount forgiven.
• Income-Based Repayment (IBR): The percentage depends on whether you’re considered a new borrower on or after July 1, 2014, or not. If you are a “new borrower,” your monthly payments are generally 10% of your discretionary income. If you’re not, your monthly payments will be 15% of your discretionary income. If you haven’t paid back your loan in full after 20 or 25 years (depending on when you received the loan), the outstanding balance will be forgiven, but you may have to pay taxes on the amount forgiven.
• Income-Contingent Repayment (ICR): Your monthly payments will be the lower of 20% of your discretionary income or the amount you would pay under a fixed repayment plan over 12 years. If you haven’t paid back your loan in full after 25 years, the outstanding balance will be forgiven, but you may have to pay taxes on the amount forgiven.

If any of the IDR plans will make your student loan debt more manageable, you can apply to the Department of Education at StudentLoans.gov to enroll and to update your income and family size, once annually.

The last repayment option is for low-income borrowers with Federal Family Education Loan (FFEL) Program loans.

• Income Sensitive Repayment (ISR): This plan is only for FFEL loans. If you qualify, your monthly payments will increase or decrease based on your annual income, but must cover at least the accrued monthly interest. The maximum ISR term is 10 years, but it may be extended for up to 5 years.

Before you choose a repayment plan though, you should use FedLoan’s Manage Repayment tool to help you figure out what your approximate monthly payment would be.

9. What if you’re having trouble paying back your loans?

Get in touch with FedLoan right away if you’re struggling to make your monthly payments. You don’t want a situation where your loan becomes delinquent or in default, because it will affect your credit score.

An account is “delinquent” the day after a first missed payment, and is deemed “in default” when it is 270 days delinquent. So, if you miss one or two payments, your loan is delinquent. But if you miss several payments, your loan will be at risk of default.

If you have money for your monthly payments but you forget, simply changing your method of payment to Direct Debit will ensure timely payments.

If you can’t afford your monthly payments, however, you need to check into lowering your monthly payments. Here are a few options:

• You can apply for IDR plans, which are based on your income, family size and state of residence, at StudentLoans.gov. To determine which IDR plan is best for you, you should have your loan details — current loan balances, loan program and interest rate of each loan, and how many months you have been repaying your loan — available. Reminder — more details are in the “repayment options” section.
• If you have multiple federal loans, you can apply to consolidate some or all of the loans into a single loan called a Federal Direct Consolidation Loan through StudentLoans.gov. In your application, be sure to note if you are interested in PSLF. The consolidated loan will bear a fixed interest rate based on the average of the interest rates on the loans being consolidated. There is NO application fee. Once consolidated, you will have a single monthly payment to make for all the loans you consolidated. Check out the potential advantages and disadvantages before you apply for consolidation.
• Another option is to refinance your loans through private lenders. Refinancing, like consolidation, allows you to roll multiple loans into one loan. Your interest rate is typically determined by your credit score. The caveat: borrowers who refinance federal student loans lose benefits provided by federal loans, including access to IDR plans that may qualify them for loan forgiveness after 10, 20 or 25 years of payments.

If you’re in a situation where you need to postpone your monthly payments temporarily, you have two options: deferment or forbearance. Both programs could have a major impact on the amount you have to pay back. Neither program is ideal, particularly if you’re working towards loan forgiveness as it may delay the time it takes to qualify for loan forgiveness. A better option may be to apply for IDR plans instead.

The bottom line

To ensure compliance with your loan obligations and for maximum savings, you should learn the terms of each of your federal loans. And don’t hesitate to contact FedLoan if you have any questions, issues or concerns.