About Fedloan
To understand why so many college graduates loathe the giant student loan servicer FedLoan, consider the experience of Megan Gammill.The special-education teacher qualified for a $4,000 grant for tuition by teaching math in a poor public schools in Prince George’s County, Md., and Baltimore.But when Gammill sent her grant recertification paperwork into FedLoan, as required, it was rejected. And as Gammill, 35, scrambled to fix it with calls and emails, the Harrisburg-based agency converted her TEACH grant into a $4,000 loan and told her the decision was irreversible.Not willing to accept another $4,000 in debt, Gammill pleaded with the servicer, speaking to about 40 call-center employees and noting many of their company identification numbers over two years to get her grant recertified. Nothing worked. Gammill prevailed only after engaging a free attorney at the advocacy group Public Citizen.“They are effectively stealing from teachers,” she said.That’s been the experience of many borrowers dealing with FedLoan, part of the state-run monolith Pennsylvania Higher Education Assistance Agency (PHEAA) that services about 7.5 million federal student borrowers. The agency faces investigations from state attorneys general and a flood of complaints and lawsuits from disgruntled customers who believe that its customer service has cost them big bucks.But now the giant loan collector is facing its own financial reckoning.PHEAA’s profits have plummeted by 90 percent over the last four years. And the agency could soon start to lose money, in part because its servicing business has gotten so much harder, with new Congress-mandated loan options requiring
Key features of the Fedloan that are enabled through these drivers include:
- Fedloan letter confirming loan forgiveness : r/PSLF - Reddit
- Negative FedLoan balance! When should I expect a notification
- FedLoan is no longer handling federal student loans: Here s
- Who Took Over FedLoan Servicing Student Loans? MOHELA
- FedLoan Servicing Gets Contract Extension: What It Means For - Forbes
- Major Legal Setbacks For Student Loan Giants Navient, FedLoan
- What to Do If FedLoan Servicing Is Your Student Loan Servicer
Today services $320 billion in student loans, or $1 in $5 of the nation’s student debt, and graduates know the servicer as FedLoan.But the contracts came with strings. As Congress and the Department of Education responded to concerns over student delinquencies and defaults, they devised an expansive menu of repayment options through FedLoan, which added to servicing costs without raising the per-borrower fee paid to PHEAA.More Loans Serviced, But Dwindling ProfitsThe Pennsylvania Higher Education Assistance Agency (PHEAA) services 20 percent of the nation's student debt. While the value of the loans it services has grown steadily, PHEAA’s profits have dropped sharply, due in part to federal regulations that added to servicing costs without raising per-borrower fees.SOURCE: Pennsylvania Higher Education Assistance AgencyStaff GraphicLawsuits also exposed PHEAA to scrutiny, raising questions about the management of its loan-servicing operations. According to a 2013 suit filed in federal court in Richmond, Va., PHEAA had no formal procedures to investigate, report, or deal with identity theft.Plaintiff and victim Lee Pele first learned that his identity had been stolen for two student loans amounting to $137,000 after a debt collector called him. In a deposition, Pele’s lawyer, A. Hugo Blankenship, elicited that the PHEAA employee who wrote the agency’s manual for “default collections” wasn’t an expert in debt collection, but was instead a high school graduate who had gone to trade school for massage therapy.Asked why she was chosen to write the manual on default collections, she responded: “I have no idea.”PHEAA settled the case, Blankenship
