FedLoan Servicing Contract Expires: What to Expect For Your Student Loans

FedLoan Servicing, a company that collected and tracked federal student loan payments, is no longer active.

Its government contract expired in December 2022, and all loans in the FedLoan portfolio have been transferred to other servicers.

If FedLoan Servicing previously managed your student loans, here’s what you need to know.

What happens if FedLoan was your servicer?

As of Dec. 14, 2022, all FedLoan borrowers were transferred to one of the following servicing companies: MOHELA, Edfinancial, Aidvantage (formerly Navient) or Nelnet.

If you had FedLoan as your old servicer, you should have received a notification from your new servicer when the transfer happened, including details about how to access your account via its servicing portal and sign up for online payments, autopay and email-only notifications.

Even if you had these features set up with FedLoan, you'll have to start them up again with your new servicer. All servicers deliver the same options and programs, but customer service may differ from one to another.

If you’re not sure which company is your new servicer, log in to your My Federal Student Aid account and scroll down to the “My Loan Servicers” section on your dashboard. You can also get in touch with any of the loan servicer contact centers by calling 1-800-4-FED-AID.

PSLF and TEACH Grants

While operational, FedLoan was the only servicer managing applications for Public Service Loan Forgiveness, or PSLF. The program allows borrowers who spend 10 years at qualifying public service jobs, like nursing, military or non-profit work, to have their remaining student loan balance forgiven after making 120 consecutive monthly payments.

FedLoan also administered Teacher Education Assistance for College and Higher Education, or TEACH, Grants. This need-based program offers $4,000 per year to students pursuing education degrees, so long as they work in a high-need field or at a low-income school for at least four years in an eight-year period after graduation.

The servicer MOHELA began processing PSLF applications in July 2022 and TEACH grants in September 2022; it is now the sole servicer overseeing both programs.

» MORE: Guide to grants for college

What do student loan servicers do?

Your federal student loan servicer is assigned by the Department of Education when your loan is disbursed to your college for the first time. The name of the company sending you a federal loan bill every month is your servicer. Your servicer can change if a contract expires, or you apply to transfer your loans to a new servicer.

Servicers are there to help you, but they may offer choices that are best for the company, not the borrower. That means they can’t change how payments are processed and may not suggest the most beneficial repayment option for you. It’s most important to know your repayment options so you can know the right questions to ask.

» MORE: Federal student loan servicers: Who are they and what do they do?

Here’s what else your servicer can do for you:

• Register for online access to your account. Once you have access you can contact your servicer, access your monthly billing statements and pay bills.

• Enroll in autopay. Your servicer can deduct your payments automatically from your bank account. Signing up for autopay will reduce your interest by 0.25 percentage point.

• Sign up for income-driven repayment. You can request income-driven repayment, which limits your student loan payments to a percentage of your income, by completing a paper form with your servicer. (You can apply online on studentaid.gov and then recertify your income each year online as well.)

• Process deferment and forbearance requests. Your servicer can help you temporarily stop making payments or reduce your payment amount if you qualify. This helps you stay in good standing to avoid default. But during any periods of deferment or forbearance, interest can continue to build.

• Process monthly payments and extra payments. Your servicer will track and collect your payments. If you want to make additional payments, you can instruct your servicer (online, by phone or by mail) to apply extra payments to your current balance. Otherwise, it may apply the additional amount to next month’s payment instead.

• Process applications for Public Service Loan Forgiveness. MOHELA is the only federal loan servicer that handles PSLF applications, including processing employment certification forms. You can submit your forms annually and apply for forgiveness once you've made 120 qualifying payments while working for an eligible employer.

How to switch servicers

You’ll be notified when an automatic loan servicing transfer happens. You are likely to remain with your assigned loan servicer unless you act to switch servicers, or you’re switched as a result of a servicer contract ending. Use this tool to find out what might work for you.

What did FedLoan Servicing do?

FedLoan Servicing managed some federal student loans from 2009 until December 2022, when its contract with the Department of Education ended. Like all servicers, it collected and tracked student loan payments from borrowers on behalf of the government.

FedLoan was operated by the Pennsylvania Higher Education Assistance Agency, or PHEAA, a non-profit that provides financial aid services and administers multiple state grant programs.

While active, FedLoan was the only servicer managing PSLF applications and TEACH grants. It faced scrutiny for deceptive practices and poor customer service, including its role in rejecting 99% of PSLF applications. 

How to complain about FedLoan Servicing

If you had complaints about FedLoan that you were unable to resolve before the servicer transfer, start by filing a complaint directly with your new servicer.

If the issue remains unresolved, you can also make complaints about FedLoan to:

• Federal Student Aid Feedback System.

• Your state attorney general's office.

• Your state consumer protection office.

• Your congressional representative.

Make sure to keep records of conversations you have, including the day, time and customer service representative you spoke with. Keep copies of any letters, bills or emails about your account.

How to settle a dispute with FedLoan Servicing

If a complaint doesn’t help, you can contact the Federal Student Aid Ombudsman Group. This method should be used only as a last resort, says the federal student aid office. When you’re ready to do so, here's how:

Phone: 877-557-2575

By mail: U.S. Department of Education

FSA Ombudsman Group

P.O. Box 1854

Monticello, KY 42633

You also can reach out to a student loans nonprofit such as The Institute of Student Loan Advisors, which provides free dispute resolution.

Approved federal student loan servicers

Learn more about each of the federal loan servicers, including what they can do and how to contact them.