Summary

FedLoan Servicing, a federal student loan servicer, concluded its operations in December 2022, resulting in a transfer of loans to other servicers. This change affects borrowers previously managed by FedLoan and shifts the administration of programs like Public Service Loan Forgiveness (PSLF) and TEACH Grants to MOHELA. The transition marks a significant shift in how federal student loans are serviced and highlights the responsibilities of servicers and borrowers alike.

📌 What Happens if FedLoan Was Your Servicer?

As of December 14, 2022, all FedLoan borrowers were transitioned to new servicers such as MOHELA, Edfinancial, Aidvantage, or Nelnet. Notifications were sent to borrowers, providing instructions on accessing accounts with the new servicers. Borrowers must re-enroll in online payments, autopay, and email notifications, even if these were previously set up with FedLoan. For those unsure about their new servicer, logging into the My Federal Student Aid account or contacting 1-800-4-FED-AID will provide clarity. While all servicers offer similar options, their customer service experiences may vary, necessitating proactive engagement by borrowers to ensure a smooth transition.

Takeaways:

• FedLoan borrowers are now serviced by MOHELA, Edfinancial, Aidvantage, or Nelnet.

• Borrowers must re-establish account settings like autopay and notifications.

• My Federal Student Aid portal can help identify your new loan servicer.

Key Terms

• Loan Servicer: The company assigned by the Department of Education to manage federal student loan payments.

• Autopay: An automatic payment system reducing interest by 0.25% when enrolled.

• My Federal Student Aid: A centralized portal to manage federal student loan details.

🌟 PSLF and TEACH Grants

Previously, FedLoan was the sole servicer for Public Service Loan Forgiveness (PSLF) and TEACH Grants. PSLF provides loan forgiveness for borrowers in qualifying public service jobs after 120 monthly payments. TEACH Grants offer financial aid to education students committed to teaching in high-need areas. MOHELA took over these responsibilities in 2022, managing applications and ongoing borrower requirements. MOHELA is now the exclusive servicer for these programs, simplifying the process but requiring borrowers to stay informed and up-to-date with their applications and certifications.

Takeaways:

• MOHELA now handles PSLF and TEACH Grant applications exclusively.

• Borrowers in PSLF must certify their employment annually to qualify.

• TEACH Grant recipients must fulfill service obligations to maintain eligibility.

Key Terms

• Public Service Loan Forgiveness (PSLF): A program forgiving loans for public service workers after 10 years of payments.

• TEACH Grants: Financial aid for education students who commit to teaching in high-need areas.

• MOHELA: The current servicer managing PSLF and TEACH Grant applications.

🛠 What Do Student Loan Servicers Do?

Student loan servicers manage billing, payments, and other services for federal student loans. They provide account access, enable enrollment in repayment plans like income-driven repayment, and process deferment or forbearance requests. Servicers also guide borrowers through options like autopay, which offers reduced interest rates. It is essential for borrowers to understand their repayment choices, as servicers may not always recommend the most beneficial options. Awareness of your rights and responsibilities ensures effective communication and management of your loans.

Takeaways:

• Loan servicers handle billing, payments, and repayment plan enrollments.

• Borrowers should actively explore and choose suitable repayment options.

• Autopay enrollment provides a small interest rate discount.

Key Terms

• Deferment: A temporary suspension of payments, during which interest may still accrue.

• Forbearance: A period allowing reduced payments due to financial hardship.

• Income-Driven Repayment: Plans that cap loan payments based on income levels.

Conclusion

The expiration of FedLoan Servicing’s contract marks a major change in federal student loan management. Borrowers must now adapt to new servicers and ensure they stay informed about account details, repayment options, and program applications like PSLF and TEACH Grants. Staying proactive and understanding the roles and responsibilities of servicers are crucial for smooth financial management and long-term success in handling student loans.