FedLoan Servicing Cost Us $20,000

Raise your hand if you’ve been personally victimized by FedLoan Servicing. If you’ve got student loans with them, you’re not going to be too surprised to hear how FedLoan Servicing totally screwed us over.

The pic above with the hundred dollar bills stuffed in the toaster basically summarizes our experience with them. I’ll start with our story of misfortune, and then I’ll give you some details on the problems my clients and friends have had with FedLoan payment and customer service.

FedLoan Servicing SHOULD NOT Be Handling PSLF

Maybe you have an experience of your own to share. Pleeeeeease share it in the comments at the end of the article. I’d love to compare what I’ve been seeing in this business with your experiences.

Frankly it’s freaking outrageous that the government gave them a monopoly on servicing borrowers in the PSLF program. Hopefully this piece and the comments will serve as exhibit A why the government should dump them.

If you’re stuck with FedLoan Servicing, then there’s a high chance you’re going for PSLF. You can enter your email below and get my 40 best tips for this program, including how to deal with FedLoan.

FedLoan Enters the Picture After My Discovery of a Promising Loan Forgiveness Program in 2015

When I met my beautiful girlfriend (now fiancee) Christine, and we started getting more serious, we had the money talk. She let me know that she had six figures of med school debt. Maybe you were the one who delivered the “I have a lot of debt” line instead of being on the listening end like I was. My reaction was basically just, “ok let’s figure out how to save money paying this back.” I viewed it as my debt too, since I was looking to spend the rest of my life with her.

fedloan servicing cost usMaybe when you graduated school or found out your partner had student loans, your first thought was the same as mine was. We’d just pay it down super fast and get out of debt, but then I found out about the PSLF program. In that moment, all my Dave Ramsey / Suze Orman conventional wisdom just went straight out the window.

We Thought We’d Found the Solution to Our Six Figure Debt

Christine could finish her training, work for a few more years at a not for profit hospital, and get whatever she had left over wiped away tax free. SOOOO COOL!!!!! I learned that we had to submit this PSLF form to the government, so I helped her fill it out. We mailed it in to this place called FedLoan Servicing, eagerly awaiting the good news that we would save tens of thousands on our debt.

fedloan servicing

FedLoan Servicing Got Involved and Torpedoed Us

So now the fun stuff, seeing how much money we lost because of them.

If you’re like me, you had no idea that submitting the certification form for the loan forgiveness program would forcibly transfer us to FedLoan. We felt ok with NelNet, our previous servicer. We thought that we would receive an answer directly from the Federal Government. When we opened the letter though, FedLoan Servicing answered us instead.

Quick back story. Christine had consolidated her loans in 2012. She had made payments for three years at that point on Income Based Repayment, so we were expecting to see 36 credits towards the 120 needed for loan forgiveness and go out on the town to celebrate.

Somehow FedLoan Lost Years of Payments, Oopsy Daisy!

Then we open the letter and look at the first page. We flipped through the document that they sent us, and half the loans said about three years of credit, as we expected.

Additionally, we kept flipping through the other pages and our mouths dropped. The other half of her loans only had 1 month of credit towards PSLF.

Of course, we tried to get in touch with them and figure out what happened. By and large, they were completely useless.

We’re pretty sure that FedLoan lost the payment history when the loans transferred over from Nelnet on 50% of her $124,000 in debt. That means the awesome loan forgiveness benefit literally evaporated before our eyes.

How Do I Calculate that $20,000 Cost thanks to FedLoans?

To analyze our debt situation, I built a spreadsheet that’s the flagship tool for Student Loan Planner, the handy free student loan calculator. You can get it for free by clicking on the button below or entering your email at the bottom of the post. Without going too deep in the weeds, our cost under PSLF for the $124,000 we owed would have been about $108,000.

We found a pretty good deal for a 2.2% 5 year variable rate that we figured would cost us about $128,000 since we were going to pay it off in a couple years. Hence, the difference between those two strategies was about $20,000.


Thanks to FedLoan Servicing, we abandoned PSLF. If we had to start over working towards PSLF at 1 month credit on half her loans, we would pay 6.8% interest for 10 years and get no forgiveness. She was almost out of training by the time we figured out that we needed to submit the loan forgiveness forms. Our window of making small monthly payments that would count towards PSLF had left us.

FedLoan Servicing Problems My Clients Are Dealing With

One of the reasons I felt like it was fair to share my opinion about FedLoan servicing is because I know that it’s not an isolated issue. After all, I’ve spoken with hundreds of clients on their student loan strategies. Here’s a sampling of problems the horrible FedLoan customer service is inflicting on them.

Honestly, I am still fighting FedLoan to be consistent in honoring and publishing months paid across all of my loans. I have concern for them trying to scrap my existing credit if I make any waves

I’ve switched my direct loans to FedLoan servicing, but from what I’m seeing, it says I have made 0 qualifying payments. I’ve made 12. What gives?

FedLoan is telling me I have to make a huge payment on the Standard 10 year plan before they’ll let me re-certify for IBR. Can’t I pay $5 on a one month forbearance?

I refinanced some of my loans and asked FedLoan multiple times to only refinance the ones with the highest interest rates. I opened my statement, and they applied it equally to everything, even the ones with lower rates than I was refinancing at.

That Time I Heard a FedLoan Compliment

Remember I’ve spoken with a large number of borrowers who had loans with FedLoan Servicing. I’ve heard positive feedback maybe one time.

The compliment? “The rep was unusually helpful and nice.” Hardly a ringing endorsement.

What FedLoan Servicing Problems Are You Dealing With?

I’ve heard and seen all kinds of horror stories with FedLoan Servicing. Can you one up me with your story? Post it in the comments. Maybe you’ve:

  • 1. Had a rep tell you that you were on a payment plan that that you actually weren’t even on (seen this one a lot)
  • 2. Called them a dozen times to accomplish a basic loan consolidation correctly
  • 3. Been put on forbearance or deferment when you could’ve been on an income driven plan
  • 4. Asked the same question multiple times to different reps and gotten a different answer each time

What I’m really looking for is if you can top our story of losing out on $20,000 thanks to the folks at FedLoan? Definitely let’s compare our misery. Remember you can also (and should) submit complaints about your FedLoan customer service with the Student Loan Ombudsman’s office.

The One Thing I Have to Thank FedLoan Servicing For: Pushing Me to Found Student Loan Planner

Our experience with FedLoan was so bad. I thought that there had to be a better way to get expert help on student debt. Moreover, I felt like graduate professionals with the highest debt loads received extremely bad service that cost them a ton of money in unnecessary student loan payments.

So after helping my fiancee analyze her loans, I helped some of our friends, and the student loan calculator I built went viral. That’s why I’m writing to you today. I do flat fee consults to solve student loan confusion over how to save the most money paying them back.

If You’re Not Sure You’re Managing You Loans in the Best Way, We Can Help

If you’re on IBR, ICR, filing taxes separately, have private loans with rates over 8%, not maxing your retirement accounts, or not saving for the tax penalty of private sector loan forgiveness, definitely check out the consult service.

Average client savings have been around $80,000 over the 10-25 year period the loans will be around.

Hopefully one day all the consolidation factories promising “Obama Student Loan Forgiveness” or “Trump Student Loan Forgiveness” will shut down.

Sadly, that day will only come when the Department of Education fires FedLoan Servicing or FedLoan cleans up its act. Look forward to reading your questions and stories below.

If You’re not going for Student Loan Forgiveness, Just Refinance and Dump FedLoan as Your Servicer



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35 Comments on "FedLoan Servicing Cost Us $20,000"

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Grace Taylor

Is the problem that FedLoan Servicing did not certify her employment for those first three years? Did she file the Employment Certification Form showing employment during that time or just from the point that the servicing of the loans was transferred to FedLoan Servicing?

Biglaw Investor
So far I have not been impressed with FedLoan Servicing. Why is FedLoan Servicing causing me such headaches? When my fiancé and I filed the ECF our loans were transferred to FedLoan Servicing (standard procedure, just like you). After a couple of weeks, FedLoan Servicing sent us a letter with this doozy: “Since you may have had a payment that was due during the transfer process or one that is coming up in the very near future, we will not automatically debit your first payment. We will postpone your payment with forbearance so that your bill doesn’t go past due.”… Read more »

Same here. Very old credit trap I saw it a mile off. Still got hit.
The month my loan transferred Fedloan sent a notice – a welcome letter. My prior service had me in forbearance for a month (Nov) then the following month (Dec) had no balance and locked my account from payment because it was transferred. Then Fedloan bills me (Feb) for December and January but they accepted the unpaid December debt as a “courtesy” also showing as a month late and I had no way to pay it until Fedloan billed me.

The thing to bear in mind is being put on forbearance while your loan transfers isn’t just FedLoan. I’ve been paying my loans off since 2010, and I’ve been switched 4 times now. Every time they put me on forbearance for at least a month. Also, FedLoan isn’t the worst I’ve had. It sounds like none of you were around for the joy that was Aspire. They were my service provider for about 10 months and I was on forbearance almost the entire time, because they could never get their payment system working. I kid you not. They were eventually… Read more »
Nick Tataryn

In addition to losing out on the payments, your interest is also capitalized during the forbearance period. This usually leads to a significant increase in the total debt amount and therefore what is gaining interest in the future, making these delays rather profitable for FedLoan

A little late this this blog but thanks for sharing your experience. I currently work at a not for profit university and have been registered for PSLF since August 2014. I noticed the other day on my statements that I only had 15 months worth of PSLF credited to my account. I did forbearance for 4 months last Fall while recalculating my loans and buying a house but other than that I have been employed at the same place for since Dec. 2013 and have sent in my ECF every year! Looking at my account, there are only statements listed… Read more »
FedLoan costed me 15,000 and prematurely sent me into default instead of granting me a differment and or income driven repayment plan. Nelnet hasn’t been much better they gave me 5 forebarances w no income driven repayment plan and then capitalized the interest. Honestly when Fedloan sent me into default was the only thing good they ever did for me because that was when ED stepped in and my income driven application was accepted and put into play. However I still have Nelnet as a servicer and $20,000 of debt that has no loan id’s on them on my NSLDS.
Daniel Johnson

Except you literally have to try to go a year past due. That’s your fault and yours alone.


FedLoan definitely likes to skim on the number of qualifying payments, among many other problems. I did my residency and then submitted my employment certification form. I then did fellowship, which was 12 months, submitted the form for that, and they replied that only 8 payments counted toward PSLF. I submitted something for them to review it over a month ago and have heard nothing.


This happened to me too. I was told I’d receive it in 2 weeks, it’s been almost a month. The last person I spoke to gave me a pretty good overview of SOME of the stuff that had happened but then stopped just as he was getting to the part that makes no damn sense, and said a letter was being drafted and to expect that the review process takes 90 days. -_-

Jeffrey Von Stetten

They’re horrible. The interest rates are through the roof and are further oppressing a segment of our nation that is already struggling tremendously. If allen greenspan and all the banking experts didn’t see the market about to crash, why are students expected to know it? It’s not their fault they entered a market in a downed economy, and they shouldn’t be expected repay what was needed to get their education or licensure for their chosen profession. I’m so tired of constantly getting screwed over by my own government!!!!!!!

Daniel Johnson

People who signed an agreement to repay should most definitely be expected to uphold their end of the contract.

T Middleton

I made 2 payment through my bank to Fedloan servicing and they have not posted to my account. Called numerous times and was told my account number is different that what is posted online. So my payments are “lost’ in LaLa land and they are supposedly “researching” where the payments are. My bank has even faxed over documentation confirming the transfer to Fedloan went through. And of course I’m delinquent now because of their error. So to save my credit, I’m going to have to make another payment to bring my account current. Did I mention I’m just an endorser?!

Daniel Johnson

It’s not their fault you put the wrong information in with your bank. So that’s actually your error.


The account number I had with the bank is the account number provided to me initially and the one currently showing online.

Hey Travis – I’m also with FedLoan Servicing. They had me on Forbearance for YEARS when I was so poor that I could’ve been on IBR with $0/month payments. And when I say years, I mean… 5 years. I have worked at a number of non-profits while paying back my loans, but have probably only made 10 qualifying payments. I sincerely doubt I’ll end up in the NP stream again. I’ve already consolidated and am on IBR, payments are fairly low, but my interest is 7.25% and I am currently ONLY paying on my $20K of rapidly accruing interest and… Read more »
Sherry Ranck
I had contacted Fedloan Servicing because they promised student loan forgiveness. I completed all of their required paperwork. I was told that I would make a payment of $142 monthly and if I do not miss a payment or am not late after 10 years ALLmy loans would be forgiven. $142 was $100 less than the original amount, so I thought I had made a pretty wise decision. 1.5 years go by I watch my credit my loans remain the same, but there is no delinquencies reported. I decided to begin a Masters program, which I completed this past August… Read more »