So, you just got a notice saying you need to register your student loans with FedLoan, and you're wondering if it's a scam.
Here's the scoop: FedLoan Servicing is a legit company. It's one of several student loan servicers contracted by the U.S. Department of Education to handle federal student loans.
FedLoan Servicing has been around for about a decade.
The Pennsylvania Higher Education Assistance Agency (PHEAA) created FedLoan Servicing in 2009 to help the U.S. Department of Education service federal student loans—specifically, Federal Family Education Loans (FFEL) and Direct Loans. They're one of only a few organizations approved by the U.S. Department of Education to do so.
Unfortunately, FedLoan Servicing has a reputation for poor customer service, and it was connected with a significant scandal in 2018 that continues to impact borrowers.
In March 2018, NPR reported that thousands of teachers were facing significant debt loads after their federal grants had been unfairly and incorrectly converted into loans.
Here's the backstory. In 2015, the U.S. Department of Education performed an audit on the TEACH grant program and found that more than 10,000 grant recipients had their grants converted to loans because of errors made by the loan servicer.
FedLoan was not the loan servicer at the time, but the Department of Education brought them in to handle the problem. The Department told FedLoan to contact the grant recipients and offer them the opportunity to have their loans reinstated as grants.
Unfortunately, FedLoan's response wasn't quite as committed as any grantee would hope.
They did contact the grant recipients ... with a single mailed letter. They didn't check to make sure the addresses they had on file were correct or follow up with anyone who didn't respond.
Plus, the letter itself stated that the grants were changed to loans prematurely, not incorrectly.
The letters, titled "INFORMATION ABOUT YOUR TEACH GRANTS THAT WERE CONVERTED TO DIRECT UNSUBSIDIZED LOANS," began with a wordy paragraph that sounded like a standard form letter and failed to emphasize that a serious mistake had been made by a loan servicer.
At the end of the letter, they provided a form—"Request for TEACH Grant Reinstatement"—for the recipient to fill out and send in.
Only 15% of those whose grants were converted to loans responded to the letters—probably because the letter's title didn't indicate the seriousness of the issue and the letter itself lacked clarity.
Another subset of grant recipients never even received letters. Their grants were converted to loans because of minor errors, like paperwork mistakes. FedLoan is making no move to restore those to their original grantee status.
Since the issue came to light, the U.S. Department of Education contacted grantees via email and created a webpage for grantees with additional information about TEACH grant reconsideration. If you had a TEACH grant that is now a loan, contact FedLoan immediately to request that the error be corrected.
To have your TEACH grant reinstated, you must show that:
Unfortunately, there are companies out there that prey on student loan borrowers, so if your instinct was to question this letter from a loan servicer you've never heard of, it was a good one. While FedLoan Servicing is legit, that doesn't mean every notice you get is.
If you've been contacted by a company about your student loans, watch out for these red flags:
And before you do anything with a letter about your student loans, find out if it's actually from your loan servicer.
At this point, if you don't know who your loan servicer is, you're not alone. Many people don't. Here's how you find out:
1. Head over to the National Student Loan Data System and click on "Financial Aid Review."
2. You'll have to accept the terms and conditions and then log in with your FSA ID. If you don't have an FSA ID, there's an option to create one.
3. Once you log in, you'll see a list of your loans. You can click on the numbered identifier for each loan and then see the loan servicer's name and address at the bottom of the page.
As a group, federal loan servicers don't have stellar reputations—and FedLoan is no different.
Unfortunately, you don't have any control over who your servicer is if you have federal loans with the U.S. Department of Education. But that doesn't mean you're out of luck.
Refinancing your student loans is one option for maintaining a bit more autonomy over your loans.
You decide who your loan servicer is because you choose a lender, and then they service your loans. Do some comparison shopping to see which lenders provide the best terms and the best customer service. Then take control of your debt.
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.
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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.
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.
Credible is an online marketplace that provides borrowers with competitive, personalized loan offers from multiple, vetted lenders in real time.
Credible is a multi-lender marketplace that empowers consumers to discover student loan refinancing options that are the best fit for their unique circumstances. Our integrations with leading lenders and credit bureaus allow consumers to quickly compare accurate, personalized loan options ― without putting their personal information at risk or affecting their credit score. The Credible marketplace provides an unrivaled customer experience, as reflected by over 2,000 positive Trustpilot reviews and a TrustScore of 9.5/10. Credible is headquartered in San Francisco, California.
For more information, click here to apply now with Credible.
Works with 300+ community lenders for higher approval chances
Connecting student borrowers to a network of over 300 community lenders with low interest rates. 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.
Many ELFI customers save hundreds per month month and thousands over the length of the loan term.
Education Loan Finance is designed to assist borrowers through consolidating outstanding education loans into one single loan that effectively lowers your costs of education and/or makes repayment very simple. Education Loan Finance - backed by the strength of SouthEast Bank - combines the benefits of traditional education loan refinancing with the superior products, service, and support found in the private market.
Check out their low rates today to see how much you can save.
Attractive Bonus and Referral Programs:
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.