FedLoan Servicing Student Loans – Overview and Repayment Options

Michael Brown Updated: January 16, 2020

If you have federal student loans, you — like millions of other borrowers — may be having your loans serviced by AES-PHEAA, possibly under the name FedLoan.

Too many names and acronyms? We hear you, and we'll explain.

Each federal loan is assigned to a servicing company for management and collection – and borrowers don’t get to choose which one. So even though you took out your loans from the U.S. Department of Education (DOE), that’s not where you send your payments after you graduate.

The DOE vets loan servicing companies based on how successful they are at collecting the loans and at satisfying their customers. The chosen companies  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.

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About FedLoan Student 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 27% of the DOE’s direct loans, serving over 8 million borrowers with debt totaling more than $300 billion.

FedLoan is a newer offshoot of PHEAA, created in 2009 during a period of restructuring. Unlike many other federal student loan servicers, PHEAA is not a publicly traded company. It's a nonprofit quasi-governmental agency.

What does FedLoan do?

Now that you have a bit of background, let's get down to what having FedLoan as a servicer means for you.

If you have a student loan assigned to FedLoan, you'll hear from the company on a regular basis, starting while you’re still in school. Since they're managing loans on behalf of the DOE, they're in charge of quite a few things that may become important to you:

  • Sending bills
  • Processing payments
  • Reviewing requests for deferment or forbearance
  • Certifying borrowers for loan forgiveness, and
  • Helping borrowers change repayment plans.

Most borrowers interact with FedLoan through its online portal. There, you can:

  • Sign up for direct debit (HINT: you can get a 0.25% interest rate reduction on each eligible loan by agreeing to have payments debited automatically from a qualified bank account),
  • Contact customer service, and
  • Use calculators to see what your monthly payments would be under different plans.

FedLoan also has a mobile app for iOS and Android.

A bit of bad news: Like many other federal loan servicers, FedLoan has been the subject of numerous consumer complaints, but don't despair. The entire servicing industry has been trying to improve users’ experiences in the wake of unflattering reports and heightened federal scrutiny.

What benefits and services does FedLoan provide?

FedLoan has a few educational perks on its website, including:

  • loan calculators
  • articles
  • videos
  • FAQs

FedLoan 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.

If you want to be the first to know anything FedLoan-related, you can follow them on Twitter. And of course, you can reach their customer service support team with the usual methods —chatting online, calling, or e-mailing questions.

What repayment options does FedLoan offer?

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 DOE. So like all of the other servicers, FedLoan offers the following prescribed set of repayment options:

  • Standard Repayment, with fixed monthly payments over a 10-year period.
  • Extended Repayment, with fixed monthly payments over a 25-year period.
  • Graduated Repayment for people who expect their incomes to increase over time. Monthly bills start low and ratchet up at regular intervals over a 10- or 25-year term.
  • Income-driven repayment plans, with monthly payments that are capped at 10-20% of the borrower’s discretionary income and qualify for loan forgiveness after 20-25 years.

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.

Does FedLoan offer deferment or forbearance?

If you’re having trouble making payments on your FedLoan-serviced loan, don’t ignore the problem.

Most borrowers should contact FedLoan immediately, and they can offer a few specific remedies to keep you in good standing and help prevent your loan from falling into default:

  • If you’re unemployed, underemployed, or experiencing economic hardship, you might qualify for forbearance or deferment.
  • Income-driven plans can reduce your monthly payments.
  • Extending the term of your loan can also lower your monthly payments.

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.

How can I get help before I default on my student loans?

For some borrowers, applying for deferment or forbearance — or even switching to a different repayment plan — helps in the short-term but can create worse financial issues in the future. Defaulting is the scariest of these, but even finding that you've been consistently making payments without making progress can be a major financial blow.

See also: The 1 Big Reason You're Not Making Progress on Your Student Loans

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 $253 a month and $16,183 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 your credit score.

See also: Student Loan Refinancing: How to Compare Rates and Choose a Lender

Curious about whether you could be getting a better deal on your student loans? Find out now with the highly-rated lenders listed at the bottom of the page. 

FedLoan Servicing Contact Information

Office Hours: M-F: 8:00 AM - 9:00 PM (EST)


Phone:  1-800-699-2908

Mailing Address:

FedLoan Servicing
P.O. Box 69184
Harrisburg, PA 17106-9184

Website: https://myfedloan.org/

Click here for more information on the other main student loan servicers.

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