How to Fix & Avoid Common FedLoan Servicing Problems

I graduated from college with ~$35,000 in student loans.

I was lucky because they were subsidized Stafford loans. My servicer was the oddly named ACS Education Services… ACS stood for Affiliated Computer Services. I got interest rate breaks for direct debit and electronic statements, both of which are common even today, and didn’t have too many problems with them.

They were not being serviced by Fedloan – which has developed quite a reputation.

Unfortunately, if you want to take advantage of the Public Service Loan Forgiveness Program (PSLF), FedLoan is the only game in town. The PSLF, in sort, is when you enter full-time public service employment for a qualified employer and make 120 qualifying monthly payments (10 years). After that time, your direct Federal loans are forgiven (loans made under the Direct Loan Program). It was created under the College Cost Reduction and Access Act of 2007.

When I emailed readers about their experiences with student loans, one name and the word “nightmare” kept coming up. Fedloan.

If you have a lot of student loans and want to know the best way to pay them off fast, you need a plan.


My friend Travis is a Student Loan Planner and he’s created over a thousand custom student loan plans that will have you out of debt faster than you can imagine. He knows all the different programs, how they work together, and what you need to do to take advantage of them.

His average client saves a projected $59,000 over the life of their loans. If you want to find out more and see if a plan might help you, check out his service.

Who is FedLoan Servicing?

FedLoan Servicing is one of the biggest federal student loan servicers and they aren't without their problems. We look at some of the common issues and how to avoid them (or at least limit the impact!). If you have student loans, you don't want to miss this!

A little background… Fedloan is a student loan servicer. A student loan servicer is a company that collects loan payments and, if necessary, help borrowers sign up for repayment plans set up by the Department of Education. This includes income-based repayment plans (IBR plans), income-contingent repayment plans, the PSLF Program, as well as others.

The Pennsylvania Higher Education Assistance Agency (PHEAA) is FedLoan Servicing’s parent company. Another name you might also see is Amerian Education Services, which is also owned by PHEAA and they manage private loans as well as those under the Federal Family Education Loan Program. These two companies service the most federal student loans in the United States.

FedLoan wasn’t always the only game in town for federal student loans. The Department of Education decided in early 2017 that they would move from nine different servicers to just one. Yep, you gussed it – FedLoan. The DOE estimated that it would save $130 million over five years, though it’s inclear how much borrowers will see in savings given the increase in volume of student loans, payments, and administrative burden.

Common FedLoan Servicing Problems

When I asked readers, they all had similar stories – “If you’re just making the regular payments and never miss any, never want to pay more, and don’t want to talk to someone… FedLoan is great!” If you want to do more than that, like making an extra payment to principal, good luck.”

In other words, if you have to actually deal with any student loan servicing issues… you will be dealing with servicing issues.

Not happy with FedLoan 🙁

So, here are some of the common FedLoan servicing problems and how to avoid them:

Forced Switch for Public Service Loan Forgiveness

If you apply for the Public Service Loan Forgiveness program, you are forced over to FedLoan Servicing from whatever servicer you were previously using. One of our readers was a little surprised by this because they didn’t realize that only FedLoan handled the PSLF (this is a more recent development, as you expect, Fedloan news isn’t on anyone’s list of high priority items!).

The trouble with this is that with no other student loan servicer for PSLF, you’re stuck with FedLoan. If you want to enter the PSLF, FedLoan is the only game in town.

If you aren’t doing PSLF, make sure you compare rates and check out the latest student loan refi cashback offers from the top refinance banks.

Direct Debit Takes Two Billing Cycles

If you set up a direct debit, expect it to take two billing cycles before it goes into effect. For those two billing cycles, you need to manually make payments and stay on top of the payments to Fedloan to avoid any type of credit issues.

This is a common complaint and one that makes a little bit of sense, direct debit isn’t instantaneous but FedLoan doesn’t seem to make it easier to confirm these issues. Also, whenever the amount changes (such as for IDR), you need to redo the entire process again.

One reader told me – “When your taxable income changes (as mine did after we had a child) I had to start over again with direct debit. Even though I had just done it a year earlier. Add on that my wife also is in the same programs, also direct debit, and twice a year I am potentially sending in new forms just to pay them and get the .25% reduction of interest rate.”

Recertifying Income Takes A Long Time

Another reader is on the Income-Driven Repayment Plan and each year he needs to recertify his income. “What I like about FedLoan is that they have a dedicated paperwork upload system where I can upload my paperwork online so no need to fax or physically mail any documents. They process the information I send to them usually within a couple days and send an email about the status of my uploaded paperwork. Emails for all my questions have usually been answered or at least responded to within a few days. The paperwork for the PSLF takes a little longer, maybe a couple months but once it is processed, they send a hardcopy letter and an email stating all the information about my current status within the PSLF program.”

While the process has improved, Fedloan has an abysmal response time. One reader told me they sent the forms in April and only heard back in late August. It’s been like that for years.

It’s gotten so bad, the Massachusetts Attorney General Maura Healey sued FedLoan Servicing (technically, they sued the Pennsylvania Higher Education Assistance Agency)!

They allege:

  • “PHEAA’s [Fedloan’s parent company] servicing failures have harmed Massachusetts student borrowers, depriving them of months that should have counted toward their loan forgiveness, causing them to lose financial grants and further saddling them with debt”
  • <“In addition, PHEAA has made it more difficult for student borrowers to manage their debt by overcharging them and misprocessing their applications for Income Driven Repayment (“IDR”) plans that make borrowers’ monthly payments more affordable.”/li>

So keep that in mind!

Clarify Extra Payments

If you make extra payments but do not specify which loans your payments are meant for, they will spread it across all of your loans. If you make a payment on one loan and do not specify, it will be applied to the next payment. If you paid more than your regular payment, the next regular payment will not be debited.

If you are on an Income-Driven Plan, you can’t make payments ahead of your IDR anniversary or recertification date. Any payment overage at that date is applied to the loan itself, not a future bill. These are key distinctions to remember because you may want your payment applied to your student loan different.

Contact Customer Service

Don’t use email – the best way to get an answer is to hop on the phone:

  • US Toll-free number: 1-800-699-2908
  • International number: 717-720-1985

They’re open Monday through Friday from 8 AM to 9 PM Eastern.

If you want to email, you will need to log in to use their secure email system. I recommend calling and talking to someone on the phone though.

Do Not Trust Their Advice

I think it’s safe to say that the customer service representatives you talk to at any company, Fedloan or otherwise, are rarely going to be the folks you want to take financial advice from. It’s not their job to know the intricacies of student loans, student loan options, and all the vagaries of debt and forgiveness. I’d expect them to be experts in their own systems, being able to apply payments properly and navigating the menus of their own computer systems.

A few of the stories I’ve heard involved folks being put on plans they shouldn’t have been on. It’s hard to give financial guidance and even harder when you don’t have a complete picture. Do not trust the FedLoan customer service reps if they give you advice or steer you in a certain direction – they’re not necessarily qualified to give that advice. They’re not being purposely deceptive and they’re not trying to trick you, they can’t possibly know the full picture.

Your Turn

Did you have an experience with Fedloan that you wanted to share? Are they like this laundry list of nightmares and student loan problems? I’d love to hear it and others would too!


Other Posts You May Enjoy:

About Jim Wang

Jim Wang is a forty-something father of four who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and farms in Illinois, Louisiana, and California through AcreTrader.

Recently, he's invested in a few pieces of art on Masterworks too.

>> Read more articles by Jim

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

Reader Interactions


About the comments on this site:

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

  1. Mel says

    Has anyone actually had qualifying payments from their original loan company applied to their PSLF with FedLoan? Does that ever happen??? I have 35 payments made to Great Lakes that are not counted in FedLoan records. Asked them to look into the discrepancy a year ago and many phone calls and emails later have nothing to show for it.

  2. Amber says

    Not sure if anyone is still looking at these comments but Mel (previous comment) I requested that my payments be calculated on their site over 14 months ago and it still hasn’t happened. I’ve e-mailed and also talked to people in that department. When I called, the person in the PSLF department said they would talk to their supervisor to see if they could escalate my request because it had been over a year. I don’t know if they are understaffed or if it is a game they are playing so people end up paying longer so they get paid but its absolutely ridiculous. In the past I have never had an issue but the past 6 months has been awful. Not only am I waiting on my payment calculation but I also got kicked off IBR and needed to re-enroll in another IDR plan. Changing that was a pain and they told me that I automatically go into deferment while they figure it out. I just don’t get it.

  3. Rhonda says

    I’m in the same situation as a combination of the one(s) above. I’m missing at least one payment from my loans that were transferred from Nelnet (from 2013) and I requested a review last year 6/5/2018 but they took away a payment prior to performing any kind of review. It’s been a year and I have followed-up many times only to be told that manual reviews for those applying for forgiveness come first. That’s great, but I have multiple emails telling me it would be complete in 60 days, 90 days, 10 months (what a random number that is!) and nothing has happened. I just sent in my annual certification so we will see how that goes. When I call, they’re apologetic but have no answers.

  4. Mike says

    My principal balance increased by almost $200 in less than a week. No capitalized interest, no fees, no explanation for such an increase. The interested accrued looks about correct but no rational reason for a significant increase on the principal. Perhaps the payment was pushed to future payment and the principal was added back on? No notification and unfortunately funds have not been carried over to future payments as I owe for next month. They essential stole this money or mishandled it. Incompetence or theft. Possibly both. I joined the Army to pay off my loans. I overpay every month and check my account every single day. This isn’t right.

    • Cece says

      This happened to me too, increased by over $4500…no explanation. Not interest cap, not a new loan. How can they do this!

  5. Tanner says

    Fedloans advice in a few words: DONT DO IT. Their customer service representatives lied straight to my face about refinancing my parent plus loans. And not just one rep, 3 did. On 3 separate occasions I called to confirm that if my mom and I refinanced my parent plus loan so that we could enter IDR and subsequently PSLF that I could still put it into deferment if I (THE STUDENT) were to go back to school. They all said yes because the loan originated as a parent plus loan that me going back to school – as the student that borrowed – would put it into deferment. Well guess who started graduate school this week. And guess who’s loan is “ineligible for deferment” due to it having been refinanced. MINE. Absolute savages that care nothing about their constituents. Now I’ll be having to take out a loan to pay a loan. I’ll be a slave to them for the rest of my life.

  6. Susan T says

    My first year with Fedloan was a dream. I was told I owed nothing on my student loan due to my income. I recertified for my second year, which is a requirement with them. They responded saying I know owe $340 a month! Nothing with my income has changed! What’s with that! My loan payment prior to them was about $150/ month at a low interest rate. I plan to address this issue with them. Has anyone else had this experience?!

  7. annoyed says

    lost 4k in payment becuase I was being told my payments were up to date. Literally told every month fo ra year that owed 0.00$ only to be told at the end of the year that a loan had capitalized and boom, 4 more in debt.

See More Comments

As Seen In: