If you have federal student loans, there’s a 1 in 3 chance that they’re being serviced by AES-PHEAA, possibly under the name FedLoan. If that sounds confusing, you’re not alone. Each federal loan is assigned to a servicing company for management and collection – and borrowers don’t get to choose which one. That means that even though you took out your loans from the U.S. Department of Education, that’s not where you send your payments after you graduate.
The government’s system for assigning loans is shrouded in mystery, but loans are sent to a handful of companies that function as the borrowers’ point of contact for everything from making payments to applying for loan forgiveness. The largest of these loan servicers is a firm with an unwieldy acronym for a name: AES-PHEAA. Here’s what you need to know about what all those letters stand for, and how FedLoan specifically manages loans.
FedLoan and AES (American Education Services) are both owned by parent group PHEAA (the Pennsylvania Higher Education Assistance Agency). PHEAA was founded in 1963 to manage loans granted through the Federal Family Education Loan Program. It started with a small portfolio of about 5,000 loans in 1964. Today, FedLoan and AES handle about 31% of the U.S. Dept. of Education’s direct loans, serving over 8 million borrowers with debt totaling almost $300 billion.
FedLoan is a newer offshoot of PHEAA. It was created in 2009, during a period of restructuring. PHEAA differs from many other federal student loan servicers in that it’s not a publicly traded company. It is a nonprofit quasi-governmental agency. Twelve of the 20 seats on its board of directors are held by Pennsylvania state legislators.
If one or more of your student loans is assigned to FedLoan, you will hear from the company on a regular basis, starting while you’re still in school. Like all student loan servicers, FedLoan is in charge of sending bills, processing payments, reviewing requests for deferment or forbearance, and certifying borrowers for loan forgiveness. The company also helps borrowers change repayment plans. Unfortunately, those functions don’t always go smoothly. Like many other federal loan servicers, FedLoan has been the subject of numerous consumer complaints, and the entire servicing industry has been trying to improve users’ experiences in the wake of unflattering reports and heightened federal scrutiny.
Most borrowers interact with FedLoan through its online portal, where they can sign up for direct debit, contact customer service, and use calculators to see what their monthly payments would be under different plans. Customers can get a 0.25% interest rate reduction on each eligible loan by agreeing to have payments debited automatically from a qualified bank account. FedLoan also has an mobile app that is available for users of iOS and Android.
FedLoan has educational content on its main website, including calculators, articles, videos, and FAQs. It also shares a companion site with sister company AES called “You Can Deal With It” that has budgeting and money management tips for college students and recent grads. FedLoan maintains a Twitter account with timely bulletins and news updates for borrowers. There are a number of ways to reach FedLoan’s customer service support team including chatting online, calling, or e-mailing questions.
When it comes to federal student loans, servicers don’t have much say in the repayment plans they offer. The list is dictated by the U.S. Department of Education. So like all of its rivals, FedLoan offers the following prescribed set of repayment options:
To make sense of all the different plans, FedLoan has a “repayment schedule estimator” tool at the bottom of the page where they are described.
If you’re having trouble making payments on your FedLoan-serviced loan, don’t ignore the problem. Most borrowers will contact FedLoan immediately, and there are a few specific remedies they can offer to keep you in good standing and help prevent your loan from falling into default:
A word of caution, though: While these measures may help ease your stress in the short term, most will keep you in debt longer and increase the total amount of interest you’ll pay. Servicers like FedLoan can’t do the one thing that is most helpful for struggling borrowers: lowering your interest rate.
Many people with FedLoan-serviced debt have been able to negotiate much better terms by refinancing their student loans with private lenders. Refinancing is especially beneficial for those who took out their loans before 2014 and are paying more than 4% interest. In a recent analysis we found that people who refinanced with private lenders saved an average of $259 a month and $19,231 over the life of their student loans. If you have more than one student loan, you can also consolidate them into a single monthly bill, making it easier to keep track of your payments and monitor your progress toward financial freedom.
The private student lending industry has responded to widespread borrower frustration with a surge of innovation. As a result, it’s easier than ever to find out if refinancing or consolidation can save you money. Most online applications take less than 5 minutes, with no impact to credit.
Curious about whether you could be getting a better deal on your student loans? Find out now with the highly-rated lenders listed below...
Office Hours: M-F: 8:00 AM - 9:00 PM (EST)
P.O. Box 69184
Harrisburg, PA 17106-9184
Works with 275+ not-for-profit community lenders for higher approval chances
LendKey operates student loan programs for over 275 not-for-profit and community lenders across the country. By partnering with these lenders, LendKey is able to give consumers direct access to the best rates available from the most borrower friendly institutions. As the servicer of all loans obtained through its platform, you can rest easy knowing your personal information will be safe and that the best customer service team will be ready to answer your questions from application until your final payment.
Offers unemployment protection and career/coaching/networking
SoFi, which stands for “Social Finance,” was created by a group of Stanford business students who found themselves with a mountain of debt after graduation. They set out to change the student loan industry and help borrowers like themselves to get lower interest rates. SoFi has some of the lowest interest rates and, unlike the other lenders we reviewed, it has no maximum amount you can finance. However, Nevada residents can’t currently refinance with SoFi. Minimum loan balances are higher in Arizona, Massachusetts and Pennsylvania due to state laws. Additional state restrictions may apply.
For every loan they fund, they contribute to the education of a child in need
CommonBond was founded in 2011 by three MBA graduates from the University of Pennsylvania’s Wharton School who wanted to help their peers escape from high-interest student loan debt. Its original focus was on grad students, but it has since expanded to cover undergrads as well.
Of all the companies we reviewed, CommonBond has some of the best customer service. The company prides itself on being easy to reach by email, phone, or live chat. It offers networking events, expert panels, insider newsletters, and even has a program help borrowers who lose their jobs to find new ones. CommonBond also makes you feel good about choosing to refinance with them by donating money to an education nonprofit for each loan they write.
Get a personalized review of your refinancing options with CommonBond today.
Earnest empowers people with the financial captial they need to live better lives.
Using technology, data, and design to build affordable products, Earnest's lending products are built for a new generation seeking to reach life's milestones. The company understands every applicant's unique financial story to offer the lowest possible rates and radically flexible loan options for living life.
Click here to apply with Earnest and to see how much you can save.
Operates in all 50 states; 2nd largest student loan refinancing lender
Laurel Road is a national online lender with customers in all 50 states, the District of Columbia, and Puerto Rico. Many of our non-bank competitors are not able to lend in all 50 states.Laurel Road has grown to be the second largest player in the student loan refinancing space in large part because of our reputation as the go-to low rate provider.
Special offers for medical resident and fellow refinance products
Splash Financial is a leader in student loan refinancing with new rates as low as 3.25% fixed APR which can save you tens of thousands of dollars over the life of your loans. No application or origination fees and no prepayment penalties. Splash Financial is in all 50 states and is intensely focused on customer service. Splash Financial is also one of the few companies that offers a great medical resident and fellow refinance product. You can check your rate with Splash in just minutes.
Click here to see more of Splash's offerings and to see how you can save money.