It should be no surprise to anyone that consumer and student loan debt in the United States is at an all-time high. Several studies put student loan debt in the United States at $1.6 trillion! A recent article in Forbes says that the average debt per student stands at $32,731. Students everywhere are looking for relief. Many students use programs from MyFedLoan to get that relief.
MyFedLoan is an online platform used for student loan repayment.
It’s the largest service students use to repay their federal student loans. The program itself goes by the name FedLoan Servicing, but its online portal is myfedloan.org. This article will give a complete overview of the MyFedLoan program as it stands in 2020.
What Is MyFedLoan?
MyFedLoan, also known as FedLoan Servicing, is an online platform. This platform is under the management of the Pennsylvania Higher Education Assistance Agency and services federal student loans. Initially, the purpose of MyFed Loan was to support the United States Department of Education in student loan servicing.
According to MyFedLoan, their main goal is to be a premier service provider to assist students in the loan repayment process. If you have heard of the William D. Ford Loan Program, MyFedLoan also services these loan contracts.
Any student with a Direct Subsidized Loan, Direct PLUS loan, Direct Unsubsidized Loan, or a Direct Consolidation Loan can have their payments processed through the MyFedLoan platform. Borrowers intending to establish a career in the public sector to be police officers, firefighters, or teachers will be paired automatically with FedLoan Servicing as part of the Public Service Loan Forgiveness Program (PSLF) available through the government.
FedLoan Servicing is also known as the Pennsylvania Higher Education Assistance Agency. This company is not a government agency, but it manages federal student loan payments and ensures student loans get paid back on time.
There are nine United States loan servicing providers aligned with the government. One of the largest is MyFedLoan.
The United States Department of Education contracts the servicer as a loan servicer for taking care of federal student loans.
How FedLoan Servicing Works
The process begins when a student takes out a federal loan. The United States Department of Education then assigns a student loan servicer (such as MyFedLoan) to assist with the management and repayment of the loan. Once the student has received a loan disbursement, FedLoan will continue to initiate contact.
The student will contact FedLoan Services for any assistance required until the loan is repaid in full rather than contacting the Department of Education. As is evident by our student loan crisis, decades may be necessary for full student loan repayment.
Loan servicers like MyFedLoan are the link between the Education Department and the borrowers.
In most instances, they do not require the student to make loan payments while attending school. During this time, FedLoan ensures the student remains updated on student loan interest and loan repayment progress.
If the student no longer needs a portion of their loan due to overpayment, they should contact FedLoan. Once the student has graduated and is beyond the grace period, the payments due will be billed and collected by FedLoan. Due to this, it’s imperative to avoid borrowing more than is necessary.
FedLoan Services And Assistance
In addition to the primary loan and repayment options, FedLoan offers several different types of services and assistance to help students with their loans.
Assistance With Appropriate Repayment Plans
If the student is experiencing difficulty making the monthly payments, FedLoan offers options for changing the repayment plan to an income-based repayment plan and/or lower monthly payments.
If the student is experiencing financial hardships, payments they can suspend them through several different options with MyFedLoan.
Students carrying student loan debt and ongoing payments frequently experience issues with paying off their debt and making extra money before they enter their full-time careers. MyFedLoan understands this and helps students navigate these financial uncertainties.
If the student has multiple loans, there is often an option for loan consolidation. They can sometimes get an interest rate reduction with a fixed interest rate. The result is decreasing the monthly payment amount. The student can accomplish this by contacting the servicer.
An Overview Of MyFedLoan
FedLoan is one of the largest providers of student loan services. By March of 2019, FedLoan student loans serviced over eight million borrowers. One of the reasons for this is because FedLoan is the only servicer for federal student loans used by the government for the TEACH grant program and Public Service Loan Forgiveness.
While FedLoan is by far the largest loan servicer, there are several other companies in this space to include:
- Granite State
- Great Lakes Educational Loan Services
- OSLA Servicing
Since the Educational Department decides which platform to use at any given time, students are unable to choose which servicer handles their first account.
While some service providers have better reviews than others, students are not able to choose which platform they use because the Educational Department makes that choice. If you are seeking a federal student loan, you are at the mercy of the Department of Education.
Even though the loan servicer is automatically assigned, ensuring the best possible relationship with your servicer is essential because you may be working with them for the next 25+ years.
Student Loan Steps
The unknowns of the federal student loan process can be intimidating, but FedLoan makes it rather simple to understand the steps.
Step 1 – Loan Approval
Once a loan is approved, MyFedLoan contacts the student and assign s a servicer to their account. If the student is uncertain which loan servicer they have, specific loan and student information are available online through the National Student Loan Data System. A simple search will reveal the loan servicer.
Step 2 – Accessing MyFedLoan
If assigned to the online MyFedLoan platform, you will use your FSA ID to log into the account. You get the FSA ID during the loan application process. Creating a new account at myfedloan.org is relatively easy. A new student will create a new account with their personal information and accept the terms and conditions.
MyFedLoan Contact Information
Also, if you like to communicate via the old school way through the post office, FedLoan Servicing accepts letters at:
4P.O. Box 69184
FedLoan can also be reached from 8:00 a.m. until 9 p.m. Eastern time Monday through Friday at (800) 699-2908. You can also send a fax to (717) 720-1628.
Who Is The Best Federal Loan Servicer?
While the top servicer is up for debate, the most popular federal loan servicers are:
- PHEAA or FedLoan Servicing. FedLoan currently handles 27 percent of all federal student loans. That means PHEAA is the largest federal loan servicing organization available at this time.
Other Student loan servicers, as previously mentioned, are:
- Granite State
The Student Loan 7 Years Myth
Believe it or not, some students believe their student loans get forgiven automatically after seven years. Unfortunately, this is not true and is often confused with the amount of time it takes for some items to drop off a credit report.
With that said, both a private and federal student loan should get handled in the same way as any other debt. Seven years from the date of the last late payment, the loan will be removed from the student’s credit report if it goes into default. After this period, the loan will no longer have a negative impact on the credit report.
The exception to this is the Federal Perkins Loan. This loan will remain on the student’s credit report until they pay off the loan. This is still applicable even after seven years. The loan will not be written off until 30 years after repayment was scheduled.
FedLoan And Loan Forgiveness Programs
Due to the partnership between the Department of Education and FedLoan, eligible borrowers may be able to take advantage of select student loan forgiveness programs.
This program is available for public employees or students serving full-time in the Peace Corps or AmeriCorps. The FedLoan programs have specific requirements to qualify for this program. To qualify, the student must make 120 on-time consecutive payments for a qualifying loan. Once all the requirements are complete, the loan may be eligible to be forgiven entirely.
FFEL: Teacher Loan Forgiveness
Teachers with FFEL program loans or Direct Loans may be able to receive Teacher Loan Forgiveness provided the borrower meets all the requirements related to employment. One of the critical elements of FedLoan is the borrower must teach at an educational service agency or a low-income school full-time.
If the requirements of the program are met, the borrower may receive loan forgiveness for a maximum of $17,500 for qualifying loans. If the teacher has a Perkins Loan, the requirements are different. The teacher must be eligible for a Perkins Loan Cancellation.
TEPSLF: Temporary Expanded PSLF
This program is for borrowers who were denied PSLF in the past. The new program helps borrowers meeting the eligibility requirements receive loan forgiveness despite rejection in the past.
TDP is available through FedLoan for both civilians and United States military veterans. The borrower must submit acceptable proof of disability to be eligible for loan discharge. Paperwork must come from the Social Security Administration, including the borrower’s social security number, a doctor, and Veteran’s Affairs, including verification the borrower is permanently disabled.
Upon approval of a TPD Discharge, the lender will eliminate the full balance remaining on the student loan. Nelnet is the exclusive servicer of this program. That means all loans approved will be forwarded to Nelnet to complete the process.
FedLoan Student Discharges
There are several different student loan forgiveness programs available through FedLoan. Qualification for any of these programs is dependent on the circumstances of the borrower. The available programs are:
- Unpaid Refund Discharge
- False Certification Discharge
- School Closure Discharge
If FedLoan approves the borrower for any of these circumstances, the student may be released from paying back their student debt.
Income-Driven Repayment Plans
The majority of programs for student loan forgiveness offered by FedLoan require the borrower to have a specific type of loan to be eligible. There are certain kinds of student loans not eligible for any of the above loans. In this instance, the best option is trying to qualify through a repayment plan based on income. The available programs include:
- REPAYE or Revised Pay As You Earn Repayment Plan
- IBR or Income-Based Repayment Plan
- ICR Income-Contingent Repayment Plan
- PAYE or Pay As You Earn Repayment Plan
- ISR Income-Sensitive Repayment Plan
Are Student Loans Forgiven For Teachers?
There are three programs for student loan forgiveness for teachers – the Public Service Loan Forgiveness, Teacher Loan Forgiveness, and Perkins loans, Teacher Cancellation. These loans can forgive a portion of or the entire federal student loan. However, none of these programs apply to private loans.
Remember, there may be forgiveness options for private loans available directly through the lender. The qualification for federal loans is teaching for five consecutive, full-time years at a qualified low-income secondary or elementary school. Borrowers with Stafford or Federal Direct loans are also qualified.
As previously stated, a maximum of $17,500 can be forgivable in the Teacher Loan Forgiveness Program. The program is for qualified teachers without a significant amount of debt. The program is not nearly as generous as forgiveness with a Public Service Loan, but the forgiveness is issued much faster.
The borrower begins by checking school eligibility where they work through the Teacher Cancellation Low Income Directory. The specific amount forgiven is based on the grade levels and subjects taught.
Special education, science, and math teachers can receive forgiveness for as much as $17,500. Secondary and elementary school teachers can receive forgiveness for a maximum of $5,000, depending on the subjects taught.
How Many Times Can You Get Teacher Loan Forgiveness?
The most straightforward answer to the question is one. There is a type of exception due to the numerous programs available for student loan forgiveness, such as Teacher Loan Forgiveness and PSLF. If a teacher is working at an eligible private or public school, they can pursue both Teacher Loan and Public Loan Forgiveness programs. Although borrowers can pursue more than one program, all qualified payments at the time the loans are forgiven will only be applicable for one program.
There are different qualifications, timelines, and requirements for each student loan forgiveness program. That means it is not possible to qualify for two programs at the same time. If the situations are consecutive, there is an exception. If, after five years, the borrower receives approval for Teacher Loan Forgiveness, qualification for PSLF is possible after making an additional 120 payments.
Is Myfedloan.org Legit?
Yes, Myfedloan.org is a legitimate company. That is just one of the numerous services for student loans that the United States Department of Education has contracted for taking care of student loans. These include nonprofit student loans, direct consolidation loans, graduated repayment loans, extended graduated repayment, higher education assistance, standard six-month repayment, federal student aid, and extended fixed repayment.
FedLoan was founded in 2009 by PHEAA to offer assistance to the United States Department of Education by handling federal student loans, specifically Direct Loans, and FFEL or Federal Family Education Loans. Unfortunately, the company has a reputation for inadequate customer service.
Consequences of Not Paying MyFedLoan
If FedLoan receives no payment on a federal student loan for over 270 days, it automatically goes into default. It is far from uncommon for a student to experience difficulty paying off a student loan. According to the most recent figures, of all borrowers, paying off student loans between 2017 and 2018, 13.5 percent defaulted in three years.
Interest will continue to accrue on ignored loans, and the balance will increase. If the borrower does not accept a repayment option or take advantage of a manage repayment tool, they will send the debt to collections. The result? In addition to the interest, expensive fees are added to the loan.
The borrower’s credit score will be negatively affected, making it more difficult to obtain an apartment lease, credit card, auto loan or mortgage. If the student defaults on a federal loan, the government can take 15 percent of the borrower’s wages!
They may also sue the borrower, although this is not common. Federal student loans do not have a statute of limitations. As long as the borrower is alive, they can be sued for nonpayment of the loan. In contrast, private loans do have a statute of limitations set by each state.
A federal loan will never go away and should be paid in full.
Can You Negotiate With FedLoan?
Although it is possible to reach a settlement, when it is a FedLoan serviced nonprofit loan, the borrower must adhere to the judgment of the lender. The only way FedLoan will negotiate is if the loan is close to, or in default.
If this happens, it is dependant on if the borrower already has or can save enough to pay the entire settlement within a few installments or if FedLoan will make a higher profit by settling rather than pursuing payment of the loan.
Trying to force negotiations by missing payments on a student loan is not recommended. Credit can easily be damaged, the loan can significantly increase due to collection costs, and any savings are generally less than expected. There is no guarantee FedLoan will offer negotiations. After nonpayment for 270 days, federal student loans automatically go to default.
How Do I Contact FedLoan Servicing?
FedLoan Servicing can be contacted Monday through Friday from 8:00 a.m. until 9:00 p.m. Eastern time toll-free at (800) 655-3813. The email address for general correspondence is firstname.lastname@example.org.
Common Complaints Against MyFedLoan
You will find numerous negative MyFedLoan reviews due to customer service issues. The customer service team has been called “inconsistent, incompetent and unhelpful” by students with federal loans.
Poor Customer Service
According to one of the FedLoan servicing reviews, a customer called in several different times and received different answers from members of the FedLoan customer service team representatives. A borrower stated a simple request required months for processing. Another borrower called MyFedLoan between 10 and 15 times during three years to correct mistakes made by the company.
Another complaint is borrowers requiring an account audit. A 30-day audit may take as long as six months.
Student Loan Forgiveness Issues
There have been numerous complaints regarding the way FedLoan Servicing handles requests for loan forgiveness. The most common complaint is that FedLoan makes no calculations regarding how many payments are necessary to count as a qualification for the programs.
To get your federal student loan forgiven, the borrower is required to make 120 qualified payments. Numerous complaints have been filed out of frustration by borrowers discovering they were short because FedLoan did not perform their job properly.
One borrower was forced to refinance due to an inaccurate payment count by FedLoan. In some cases, complaints were filed with the Better Business Bureau. Another common complaint is there is not enough information available about PSLF.
Numerous borrowers issued complaints because when they spoke to a customer service representative about the program, it was obvious the representatives did not understand the program or how it worked. The FedLoan issues regarding PSLF became so poor, the Attorney General of Massachusetts filed a lawsuit in 2017 against FedLoan.
According to the complaint filed, Maura Healey accused FedLoan of being responsible for public servants being denied assistance and benefits through both the TEACH and PSLF Grant programs. The Attorney General asked for restitution for all of the borrowers impacted in addition to penalties for the FedLoan Servicer. Additional lawsuits against FedLoan have since been filed.
Numerous complaints have been received regarding the way requests for income-driven repayment are being handled by FedLoan. Borrowers unable to afford their monthly payments are offered some relief with this type of repayment plan.
In certain instances, lousy information was provided by customer service representatives as to the plans available and how they work. Plan requests have been completely mishandled forcing borrowers to make bigger and unaffordable payments.
Even if students are doing all they can to make extra money, there have been complaints that MyFedLoan is less than helpful in these situations.
One borrower claimed FedLoan required several months to correct this issue. This resulted in the borrower paying more than $800 per month for the standard repayment plan as opposed to the $105 per month that should have been paid. There have also been many complaints regarding the way payment processing is being handled by FedLoan.
The majority of complaints claimed payments were not applied correctly by MyFedLoan to outstanding loans. One borrower received a letter from FedLoan stating an adjustment was required for the account. The result was an increase of $2,000 for the principal balance. When the borrower contacted FedLoan, no response was received.
Another borrower discovered payments continued to be deducted from the associated checking account despite the loan having been paid in full.
Why FedLoan Payments Increase
One of the main reasons for an increase is a change in the calculations used for the interest rate. The interest paid is compounded daily for student loans. This can result in a larger monthly payment. When a month contains 31 days as opposed to 28, the monthly payment will be higher simply because the month has additional days. More interest is charged due to these extra days.
Any loan using a variable interest rate as opposed to fixed-rate can change. If the LIBOR or Prime Lending rates increase, the borrower may see a difference in the amount of the monthly payment. Banks offer favored customers a better interest rate referred to as the Prime Lending rate.
Some of the leading banks throughout the world charge a LIBOR rate for short-term loans. The payments may not be going where the borrower believes.
Not Seeing The Principle Change? Here Are A Couple of Reasons
There are two reasons no progress is being made for the total amount of the loan.
The first is the payment distribution if the borrower has more than one loan. The second is how the payments are being applied by the lender. When a monthly payment is made on the loan, the funds are applied in a certain order by the lender. The lender covers any late fees owed first. Funds are then applied to the interest. Funds are applied to the principal balance last.
If the borrower has multiple loans, each loan most likely has a different interest rate. If the payment is evenly distributed by the lender among all of the loans, the chance is good any difference in the balance of loans with a higher interest rate will be minimal.
The best option is to contact the lender to have a larger portion of the payment applied to the loans with a higher interest rate. If the borrower has the cash available, it is a good idea to make an extra payment specifically for the loan with the highest interest rate.
Wrapping It Up – An Overview Of MyFedLoan.org
There is no such thing as a perfect system for processing loans operated by the government. The best option for anyone with a student loan is to pay off the debt as quickly as possible.
Whenever possible, the student should refrain from taking out a student loan. Student loans can be difficult to pay off and the borrower may or may not qualify for student loan forgiveness. The best option is paying off all debt and staying out of debt.
This being said, the platform offered by MyFedLoan is straightforward. If the borrower pays off their student loans proactively and responsibly, the debt will disappear sooner than later. In order to build a secure and stable financial future, the borrower needs to pay off all of their student loans as quickly as possible or receive student loan forgiveness.