FedLoan Servicing, Official Servicer for PSLF, Not Renewing Contract With Dept of Education

PHEAA (Pennsylvania Higher Education Assistance Agency), which conducts its student loan servicing operations for federally-owned loans as FedLoan Servicing, announced in its press release on July 8, 2021 that it’s not renewing its contract as the PSLF service. PHEAA/FedLoan Servicing’s current contract ending on December 14, 2021:

“The Pennsylvania Higher Education Assistance Agency (PHEAA) notified the U.S. Department of Education’s Office of Federal Student Aid (FSA) today that it will 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, which expires December 14, 2021, in an effort to more appropriately focus on its core public service mission in Pennsylvania.”

PHEAA attributes the non-renewal reasons to the “increasingly complex and challenging” loan terms, as well as because “the cost to service those programs increased dramatically.” In other words, the job is too expensive and time consuming.

Right now we do not know who the next servicer will be, but PHEAA did mention (above) that it will do what is needed to ensure a smooth transition for borrowers.

We recommend borrowers enroll in PAPER, not electronic statements to keep track of their previous PSLF eligible payments and previously filed Employment Certification Forms. You can also check https://nsldsfap.ed.gov/nslds_SA/ to make sure your PSLF eligible payments count is accurate and matches the count at both FedLoan Servicing and the future PSLF loan servicer.

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