My Fed Loan

My Fed Loan

If you have taken a federal student loan, there is a 1 in 3 chances that it is being serviced by FedLoan, who are known as AES-PHEAA.

That may sound a little confusing, but, don’t worry, I shall explain.

Now, all federal loans, are generally assigned to a management and collection company, and borrowers are not allowed to choose which one. This means that, if you got a loan from the US Department of Education, that is not exactly where you are supposed to send the monthly repayment.

The process in which the government assigns loans to the collection companies is shrouded with mystery, and you may not know in advance which company your loan shall be assigned to. They usually choose a handful of companies to act as your point of contact for all thing's loans.

These are the companies you shall use for loan repayment purposes, and in case you need to apply for forbearance.

One of the largest companies that the government uses is the FedLoan, which goes by the acronym we mentioned above.

What is FedLoan Company, and what exactly do they do?

FedLoan company was founded in 2009, and it is owned by a company known as PHEAA (the Pennsylvania Higher Education Assistance Agency)

This is a company that manages loans that have been granted by the Federal Family education program, and currently, they deal with at least 31% of all U.S Dept Education loans. This comes to about 8 million borrowers with a loan amount totaling $300 billion.

If your loan has been assigned to FedLoan, you shall definitely hear from them often, as soon as you qualify for the loan. Like all loan servicing companies, they are responsible for processing payments, sending bills, certifying borrowers for loan forgiveness, and reviewing any requests for forbearance or deferment.

Most of their clients interact with them through their online portal, and you can even be able to sign up for a direct debit, use the available calculators to see your monthly payments and contact their customer service department.

Limitations of FedLoan:

This is a company with very many clients and tends to perform plenty of functions for them, but unfortunately, they don’t always go smoothly, and in the last couple of year, FedLoan has received many negative reviews from their clients.

In fact, most people claim that their services are miserable, and they have been wondering how they can change things.

Now, get this, things are so bad at this company, that the Office of the Attorney General in Massachusetts have filed a lawsuit against the company, alleging that they mishandle the student loans and this affects teachers as well as other public servants, not to mention the students themselves.

Here are some of the chief complaints concerning FedLoans:

Their loan forgiveness program:

This is literally the most talked about the problem when it comes to FedLoans. Almost all students that have applied for it have had one or two things to say about it.

Now, to start off, you need to know that FedLoans are the only services that deal with Public Service Loan Forgiveness, and if you apply for this program, you will automatically be switched from your current loan servicer to FedLoans.

PSLF is a program that forgives you the remaining balance on your federal loan. This happens after you have managed to make at least 120 monthly payments. It definitely sounds like a sweet deal so you can imagine the number of applicants the program receives.

Some clients experienced problems with FedLoans when they tried to apply for the program. Among the problems they encountered included;

  • Getting negative feedback concerning their PSLF payments that stated that their years of paying for the loan did not qualify as payments for PSLF.
  • Losing all of their repayment histories.
  • Delays in the process
  • Failure to accept paperwork that would enroll borrowers into the program.

This sort of neglect has caused most of the borrowers to get even more into debt. This is because, when the application is rejected, the borrower is usually put on forbearance, which causes more interest to accrue on the loan and the end the loan goes into arrears.

Some borrowers were actually not able to receive any tangible feedback concerning their applications, and therefore, they could not resolve the issue at all. In the end, they had no choice but to end up being stuck with FedLoans until their loans were cleared.

What can you do if you find yourself in this situation?

Please, if you are a student and are reading this review, do not allow it to discourage you from applying for PSLF. It is a reward for public service, and in order to minimize the number of such issues, here are some suggestions;

  1. Ensure to understand all of the rules of the PSLF program, and always find out in advance if you actually qualify. If you do not understand the rules correctly, and you end up making an erroneous application, there is really not much that FedLoans can do about it.
  2. Enrol in an income-based repayment plan as soon as you read this because you must FIRST be enrolled in one before you can even be considered for a PSLF. Any payments you made before you enrolled in the income-based payment are not considered when qualifying you for the program.
  3. Keep a clean record of all payments you made that you wish to be considered in the PSLF. In this way, in case FEDLOAN loses the paper trail, you shall always be covered.
  4. Get an annual verification for the PSLF, and this includes all of the paperwork that your employer may be having.
  5. Keep a good record of all the conversations you have had with PSLF so far, including phone calls and whom you specifically spoke too.
  6. If you are having any issues with the representatives, ask to speak to the managers.

These solutions, do not guarantee that your application for the PSLF will go smoothly, but it doesn’t really hurt to do things the right way and follow the rules. They will be less chances of complications, and in case of any disputes, you shall be covered as you have been keeping all of the necessary documentation and conversations.

The Teach Grant Problem:

Now, in addition to the PSLF, FedLoan is also the only servicer of the Teacher Education Assistance for College and Higher Education (TEACH) Grant Program. If you ever apply for this program, you shall immediately be assigned to FedLoans.

The teach grant system actually provides more than $4,000 each year, to any student that pledges to teach in areas that have low-income. What you do is enroll in this system and receive money in the form of a grant that you do not pay back.

There are many problems associated with the Teach program and FedLoan. One of them is the manner in which the FedLoans have been managing the program, as there have been many reported errors and thousands of grants have been converted into loans. This is terribly wrong; as you know, grants are not meant to be repaid.

Most borrowers claimed that, instead of receiving the promised $4,000 each year, they found themselves servicing loans worth over $20,000.


Some of the reasons that led to this error are;

  • The students did not receive the important emails, probably due to change of address.
  • Narrowly missing the deadlines for submission even by one day.
  • Not being able to receive the paperwork from FedLoans on time.

How do you minimize this problem?

  • Use an email address that you can be able to access even after you graduate.
  • Always check the junk folder of your email if you are expecting some news concerning your application.
  • Ensure to keep your contact information updated at all times.
  • Submit the forms ahead of time, and avoid the last-minute rush.


The problems with FedLoan may not be many, but they are definitely huge. If you miss your PSLF or your Teach Grant, it can really mess up with your finances, and it is, therefore, essential that you keep all the information current, and continuously follow up on any applications you may have made.

Other issues that may have been reported on a small scale include;

Direct debit delays – FedLoan may take up to 2 months to effect a direct debit change on your account. To correct this, simply ensure that you continuously monitor your account, and when the changes do not reflect, contact the company immediately and directly.

Incorrect application of payments – if you would like to pay more, or less, or change the date of remittance, you are free to do so, but many borrowers have complained that even after contacting the company and requesting these changes, they were never really applied.

To correct this, simply monitor your account regularly and contact the company when the changes are not affected.

As you can see, the simple system of managing the problems associated with most of these loan servicing companies is to ensure that you monitor your account. In this way, you shall be able to tell in case of any changes.


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