Fedloan Rehabilitation: What Are Your Options?

FedLoan Servicing, also known as the Pennsylvania Higher Education Assistance Agency (PHEAA), was responsible for managing Public Service Loan Forgiveness (PSLF) applications, employment certification forms, and administering TEACH grants. On December 14, 2021, PHEAA ended its contract with the Department of Education, transferring its student loan accounts to other servicers. Borrowers can now find information about their current servicer by logging into their National Student Loan Data System (NSLDS) accounts. While FedLoan no longer handles federal student loan accounts, it is important to understand the process of loan rehabilitation for those who may have utilized FedLoan's services in the past. Loan rehabilitation is a one-time opportunity to get federal student loans out of default, requiring nine on-time payments over a 10-month period.

FedLoan stopped servicing federal student loan accounts in 2021

FedLoan Servicing, one of the largest federal student loan servicers, stopped servicing federal student loan accounts on December 14, 2021. The Pennsylvania Higher Education Assistance Agency (PHEAA), commonly known as FedLoan Servicing, ended its contract with the Department of Education. The decision was influenced by the complexity and rising costs associated with the federal student loan program.

As a result, FedLoan's student loan accounts were transferred to four new servicers: MOHELA, Edfinancial, Aidvantage, and Nelnet. The transfer process was completed in 2023. Borrowers can access information about their current servicer by logging into their National Student Loan Data System (NSLDS) accounts. They can also contact the Federal Student Aid Information Center at 800-433-3243 or review their credit reports to identify their new servicer.

It is important to note that while loan interest rates, repayment terms, and account balances should remain unchanged, borrowers are advised to monitor their student loan accounts closely to prevent potential issues. Additionally, borrowers with unresolved complaints or concerns about the transfer process can contact the customer service of their current loan servicer. If issues persist, they may need to reach out to their state attorney general's office or state consumer protection office.

The Department of Education introduced a PSLF Help Tool to ensure borrowers receive accurate information. This tool enables borrowers to search for qualifying employers, understand eligibility requirements for loan forgiveness, and access the necessary forms. Borrowers pursuing PSLF or monitoring TEACH Grant status can also log into studentaid.gov and utilize the PSLF tracker for updates.

FedLoan's responsibilities included managing Public Service Loan Forgiveness (PSLF) applications

FedLoan Servicing, also known as the Pennsylvania Higher Education Assistance Agency (PHEAA), was responsible for managing Public Service Loan Forgiveness (PSLF) applications. FedLoan was commissioned by the Education Department to manage its FedLoan Servicing Account, which included handling all customer service staff roles concerning loans, such as payment processing, invoice delivery, and problem-solving.

FedLoan's responsibilities in managing PSLF applications included processing employment certification forms and administering TEACH Grants. PSLF is a program that allows qualifying federal student loans to be forgiven if the borrower works for a qualifying public service employer and makes 120 qualifying monthly payments. Qualifying employers include working for the U.S. federal, state, local, or tribal governments, the U.S. Military, or certain non-profit organizations.

FedLoan's management of PSLF applications came under controversy in recent years, with allegations of mismanagement, providing inconsistent information to borrowers, and failing to inform them about their right to appeal mistakes. As a result of these issues, on December 14, 2021, FedLoan Servicing ended its contract with the Department of Education, transferring its student loan accounts to other servicers. The new servicer for PSLF participants is now MOHELA, and borrowers' autopay information has been automatically transferred to the new servicer.

While FedLoan no longer handles federal student loan accounts, borrowers can still access information about their loan type, interest rates, and repayment amounts by logging into their FedLoan Servicing accounts. Additionally, they can contact the Federal Student Aid Information Center or check their credit reports to find out who their new loan servicer is.

FedLoan is one of the biggest student loan companies

FedLoan Servicing, also known as the Pennsylvania Higher Education Assistance Agency (PHEAA), was one of the biggest student loan companies. It was commissioned by the Education Department to manage their FedLoan Servicing Account. This included handling all public service loan forgiveness applications, employment certification forms, and administering TEACH Grants.

FedLoan was responsible for customer service, payment processing, and solving problems. Once logged into a FedLoan Servicing account, customers could see what type of federal student loan they had, the interest rate, the repayment amount, and select a repayment plan.

FedLoan was one of the "Big Four" student loan servicers, along with EdFinancial, MOHELA, Aidvantage, and Nelnet. However, as of December 14, 2021, FedLoan Servicing stopped handling federal student loan accounts and its contract with the Department of Education ended. Its student loan accounts were transferred to other servicers, including MOHELA.

FedLoan has been the subject of several controversies, including allegations of mismanagement of PSLF loan accounts, providing inconsistent information to borrowers, and converting TEACH Grants to loans for minor clerical errors.

Student loan rehabilitation is a one-time opportunity

To rehabilitate a defaulted student loan, you must submit a written agreement and make nine on-time monthly payments within 20 days of the due date over a 10-month period. These payments must be voluntary. For example, money seized from a tax refund does not count as a payment. After your last payment, your loan will be removed from default, collections such as wage garnishment will stop, and you will be placed back into repayment. Your loan may also be transferred to a new loan servicer.

It is important to note that not everyone qualifies for loan rehabilitation, and there are some marks on your credit score that it cannot erase. Additionally, you can only rehabilitate a defaulted student loan once, so it is crucial to have a strategy to afford your payments after rehabilitation. If your rehabilitated loan defaults again, your only option may be to consolidate it out of default, assuming it is your first time consolidating that loan.

FedLoan Servicing, also known as the Pennsylvania Higher Education Assistance Agency (PHEAA), was previously responsible for managing student loans and Public Service Loan Forgiveness (PSLF) applications. However, as of December 14, 2021, FedLoan stopped handling federal student loan accounts, and its student loan accounts were transferred to other servicers.

Rehabilitation removes a loan from default

Loan rehabilitation is a way to get your defaulted student loan back in good standing. It is a one-time opportunity, so it is important to have a strategy to afford your payments post-rehab.

To start the loan rehabilitation process, you must submit a written agreement to rehabilitate your defaulted loans. You are then required to make nine on-time payments within 20 days of the due date over a 10-month period. Payments must be voluntary. Once you have made your nine payments, your loan will be removed from default, collections will stop, and you will be placed back into repayment. Your loan may be transferred to a new loan servicer.

It is important to note that FedLoan Servicing, also known as the Pennsylvania Higher Education Assistance Agency (PHEAA), ended its contract with the Department of Education on December 14, 2021. As a result, its student loan accounts were transferred to other loan servicers. If you had unresolved complaints with FedLoan before your loan was transferred, you should contact the customer service of your current loan servicer.

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