IMPORTANT NOTE: FedLoan and the Department of Education just announced on 11/11/2021 that FedLoan will continue to service federal student loans until December 2022. This means that borrowers will not have to contend with a servicer transfer before the restart of payments. This is welcome news, but the steps below still apply for when the company transfers accounts in late 2022.
Earlier this year, a FedLoan Servicing transfer was announced. The servicer said it would stop servicing federal student loans at the end of its current contract, which expires on December 14, 2021. This news, along with the upcoming end of the student loan freeze, will impact millions of borrowers.
Anytime there are changes within the federal student loan system, there’s a risk of account and loan details getting mixed up in the shuffle. In particular, borrowers who are pursuing the Public Service Loan Forgiveness program should be aware of how the FedLoan Servicing transfer of their loan accounts might be impacted.
With the transition away from Fedloan Servicing coming up soon, here are some actions borrowers should take to ensure the transition to a new loan servicer goes smoothly.
What all FedLoan Servicing borrowers need to do
Regardless of the type of loans that Fedloan Servicing handles for you, there are certain steps you should take ASAP.
1. Verify your information
Log into your Fedloan Servicing account and ensure that all of your personal information is correct. Check your contact information, including your mailing address, phone number and email address. Keeping your contact information up-to-date makes it easier for your new student loan servicer to reach you after the transition.
2. Keep good records
It’s always a good idea to keep document records from your loan servicer. Print out or download copies of monthly statements, payment records and other documents available on FedLoan Servicing’s website while you still have access to its website.
If you don’t see something, contact them and ask for copies.
If you’re on an income-based repayment plan, do yourself a favor and ensure that your income is certified. Keep any letters or correspondence that verify your current payment amount based on the last time you recertified your income. Make copies of any correspondences you’ve had with FedLoan Servicing, especially if you’ve run into issues in the past.
3. Monitor your account
Continue to watch your account before and throughout the transition. Check your payment information and make sure it’s still correct.
If you participate in automatic payments, you may need to set that up again once your account is moved to a new loan servicer. When you do, ensure that any automated payments are successfully made.
The last thing you want is to run into payment processing issues or miss a payment and get hit with late fees. Although Fedloan Servicing’s contract ends December 14, the Department of Education stated that both servicers will work together to ensure a smooth transition for borrowers.
What borrowers pursuing PSLF need to do
Borrowers who’ve been working toward loan forgiveness through Public Service Loan Forgiveness should take extra measures to ensure qualifying payments and other information transfer to the new loan servicer correctly.
Get your qualifying employer certified
Ideally, get your qualifying employer certified before FedLoan Servicing’s contract ends. This is a step you should take annually if you’re pursuing PSLF, anyway. To certify employment, fill out and submit the PSLF Certification & Application Form. If you need help, you can also use the PSLF Help Tool for additional assistance.
Verify you received credit during the student loan freeze
As part of its COVID-19 Relief efforts, the Department of Education announced that suspended payments during the student loan freeze counted toward the 120 qualifying payments for PSLF.
To receive credit for suspended payments, borrowers must certify their employment for the same period as the suspension. If you already have, watch your account to verify that you actually received credit for those payments.
How to resolve inaccurate student loan payment counts
FedLoan Servicing has a reputation for miscalculating qualifying PSLF payment totals. Chances are that trend will continue during this transition period. If your qualifying payment count isn’t correct and FedLoan Servicing isn’t helping, you should act fast.
Borrowers can escalate their dispute three ways:
- Submit a formal complaint: Borrowers can submit a complaint through the Federal Student Aid Feedback Center.
- Contact the Ombudsman Group: The Federal Student Aid Ombudsman Group is a neutral party that helps settle disputes concerning federal student aid.
- Contact your local congressional caseworker: These caseworkers help constituents navigate disputes with federal agencies, including those with student loan repayment. You can find your congressperson online through the U.S. House of Representatives website. Once you identify your congressperson, navigate to their page to contact them for help.
In October 2021, the Department of Education announced that many Fedloan Servicing borrowers would soon be transferred to MOHELA, while others would eventually transition to Navient, Edfinancial and Nelnet. If you haven’t received a notice yet, you should receive a notice about your new loan servicer soon.
Although missteps with federal loan transitions aren’t a regular occurrence, staying on top of your loans is the only way to ensure everything comes out correctly. Take steps now to ensure your student loans transfer over properly so you can continue repayment without issues.
Once your loans are transferred, work with your new loan servicer to reestablish payments, so there is no interruption.