By now, you may have seen the announcement from FedLoan Servicing or its official corporate name – the Pennsylvania Higher Education Assistance Agency, that they will not renew their contract with the United States Department of Education. FedLoan Servicing currently acts as the servicer for roughly 8.5 million borrowers of federal student loans – to put that in perspective, that is around 20% of all federal student loan borrowers.
In a press release on July 8, FedLoan Servicing said that it would not accept an extension of its 12-year old federal student loan servicing contract beyond what is needed to ensure a smooth transition for borrowers. Their current contract is set to expire on December 14, 2021. FedLoan Servicing cited increasingly complex loan programs and rising costs to service those programs as reasons for stepping back from the responsibility of servicing federal student loans.
We realize this news is especially alarming to borrowers currently on track for the Public Service Loan Forgiveness program because FedLoan Serving was the servicer appointed by the Department of Education to oversee the program.
Watch the video about the FedLoans Servicing Announcement or keep reading:
Stay tuned for more developments around the FedLoan Servicing story and the Administrative Forbearance. Continue to lean on our team at SDT as a resource.
Will Koster is a financial planner with Spaugh Dameron Tenny. The experience of losing his father as a teenager helped Will find his calling in financial planning. He has a passion for working with dentists and physicians, helping them navigate their unique wealth creation journeys. In addition, Will has become the in-house expert on student loans after completing the Certified Student Loan Professional® training.
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