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Review: FedLoan Servicing (PHEAA)

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If you have federal student loans, you may remember that you didn’t get to choose who services them. Now that you’re in repayment, however, the ball’s in your court.

If some or all of your education debt rests with FedLoan Servicing, you could elect to consolidate with another federal servicer or refinance via a private lender. If keeping your loans where they are is best, you could use the servicer’s MyFedLoan platform to ensure your repayment is progressing the way you want it to.

Whether you’re new to FedLoan Servicing or a veteran borrower looking to make a change, read on to review your options.

What to expect from FedLoan Servicing loans

FedLoan Servicing, a branch of the Pennsylvania Higher Education Assistance Agency (PHEAA), has serviced FFELP loans and federal direct loans since 2009. MyFedLoan features a library of common repayment answers and questions — everything from making payments to switching repayment plans, and of course, consolidating.

FedLoan Servicing is the only servicer to handle Public Service Loan Forgiveness (PSLF) applications for the Department of Education. To manage your loans in other significant ways, however, you might need to head elsewhere to take action.

If you have trouble affording your monthly loan payments, for example, you could take a look at the servicer’s FAQ on income-driven repayment (IDR) plans. This will, in turn, direct you to complete an IDR application on

You might be able to accomplish all your student loan management in one place sometime in 2019. That’s when the Department of Education’s Next Generation Financial Services Environment — NextGen, for short — is slated to debut. Until then, expect FedLoan Servicing to merely be your first stop, not the final destination.

FedLoan consolidation vs. refinancing

If you hope to consolidate — or group — your FedLoan Servicing loans, you’ll need to apply for a direct consolidation loan via The application typically takes 30 minutes to complete.

With FedLoan consolidation, you could reap the following rewards:

If you prefer to keep your debt with FedLoan Servicing, you might select it as your consolidating servicer. If that’s the case, you could monitor your consolidation application progress via MyFedLoan. The process typically takes four to six weeks.

And then there’s student loan refinancing. Unlike FedLoan consolidation, refinancing can only be accomplished with a private lender. Through this measure, you’d also be able to group your loans.

If you or your cosigner has excellent credit, you could also potentially lower your interest rate by refinancing. This way, you could save money by paying out less over the life of your loan.

Before choosing the refinancing route, however, make sure you aren’t going to miss safeguards that are specific to federal loans, including:

  • Income-driven repayment plans
  • Mandatory forbearance
  • Loan discharge and forgiveness

What borrowers say about FedLoan Servicing

If you’ve experienced problems paying your FedLoan-serviced student loans, you’re not alone. More than 650 complaints about the servicer have posted on the Better Business Bureau’s website.

FedLoan Servicing has had other hiccups in recent years, including the attorney general of Massachusetts filing suit in the summer of 2017. The lawsuit alleged FedLoan Servicing mismanaged debt forgiveness programs for teachers and other public servants.

To boot, the Consumer Financial Protection Bureau’s (CFPB) database lists close to 8,000 complaints levied against PHEAA since 2012. Borrowers pointed to a range of issues, including:

  • Poor customer service
  • Incorrect handling of payments
  • Excessive fees

Of course, borrowers who received good service might be less likely to share their experiences online, but the complaints suggest FedLoan Servicing probably has room for improvement.

How to resolve issues with FedLoan Servicing

If you’ve experienced similar problems with FedLoan Servicing’s payment systems, make every effort to fix them. If you call MyFedLoan’s customer service and speak with someone who isn’t helpful, then don’t be shy about asking to speak with someone else or, better yet, a supervisor.

You can also email FedLoan Servicing, call 1-800-699-2908, fax 717-720-1628, or write to this address:

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

If you need to resolve a credit dispute — perhaps a payment never went through, and it now shows up as late on your credit report — fill out the servicer’s Direct Credit Dispute Form and mail it to this address:

FedLoan Servicing Credit
P.O. Box 60610
Harrisburg, PA 17106-0610

How the Student Aid Ombudsman Group can help

The Student Aid Ombudsman Group can help mediate disputes between borrowers and loan servicers. The key word is mediate – the ombudsman will not take a side in the argument. Its job is to review all information provided and respond impartially.

You can contact the Student Aid Ombudsman Group after completing a self-resolution checklist formatted by the Federal Student Aid office.

If you feel that your servicer has been detrimental to your student loan payoff progress, you have every right to complain. Plus, if the ombudsman doesn’t receive complaints, it won’t be aware of the issues.

The easiest way to get in touch with the ombudsman is to use the FSA’s online feedback system. You can also send a letter or form to this address:

U.S. Department of Education
FSA Ombudsman Group
P.O. Box 1843
Monticello, KY 42633

If you’d rather call, the number to use is 1-877-557-2575. You can also fax your letter, form or additional documentation to 606-396-4821.

Finally, you can also submit complaints to the CFPB. Like the Ombudsman Group, the CFPB acts as an objective third party. It promises a response within 15 days of receiving your complaint. However, the CFPB’s top student loan official resigned last year in protest that the agency wasn’t doing enough to protect borrowers. (Note, Student Loan Hero, like MagnifyMoney, is a subsidiary of LendingTree.)

Don’t ignore issues with FedLoan Servicing

That said, however, being unhappy with FedLoan Servicing probably isn’t a good enough reason to consolidate or refinance your student loan debt. These measures can help you get closer to ending your education debt, but they’re not right for everyone.

Consider the pros and cons of refinancing, for example, before you trade your federal loan protections for a lower overall interest rate. The same goes for FedLoan consolidation.

No matter the next stage of your repayment, be proactive with all of your loan servicers and document your communication. Remember that no one cares about your situation more than you do.

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Student Loan ReFi

Should I Refinance My Student Loans?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

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Refinancing student loans is similar to refinancing other types of debt — you apply for a loan and use the money to pay off your existing loans. With student loans, the refinancing lender will generally send the money directly to your current loan servicers, and you’ll then start making monthly payments to your new lender.

You may be able to simplify your monthly payments by combining multiple student loans into one new loan. Refinancing could also save you money if you get approved for a lower interest rate than you’re currently paying, and you may be able to decrease your monthly payments depending on your loan’s rate and term.

10 questions to ask when deciding if you should refinance your student loans

There are many pros and cons to refinancing student loans, but everyone’s circumstances are different and there isn’t a universal answer to whether refinancing your student loans is a good idea.

What is certain is that once you refinance your loans you can’t undo the process — your old loan has been paid off, and you’re working with a new loan now. You may be able to refinance again, but you’ll never be able to switch back to your original terms.

To help you decide the best course of action for your situation, ask yourself the following questions. The answers can help you determine if you should refinance your student loans.

1. Do you have federal or private student loans?

A variety of institutions originate student loans, including the U.S. Department of Education and private banks. As a result, you may have federal student loans, private student loans or a mix of the two.

You may be able to refinance federal or private student loans, and you may be able to combine both your federal and private loans into one new private student loan. (Only private lenders offer refinancing.)

If you have federal student loans, one of the largest potential downsides to refinancing is that your new private loan won’t be eligible for federal student loan programs, including income-driven repayment programs, forgiveness, cancellation, forbearance, deferment and discharge options. Private lenders may offer some similar programs that allow you to delay making payments if you’re experiencing a hardship, but they don’t offer loan forgiveness programs.

If you have private student loans, replacing your current loan with a new private student loan may not be as difficult of a decision. However, you’ll still want to compare each lenders’ programs and benefits rather than solely comparing the interest rates and loan terms.

2. Do you plan on using a federal repayment plan?

Federal student loans may be eligible for up to five income-driven repayment (IDR) plans. In some cases, your monthly payment amount could drop to $0, and you can switch between plans for free at any time.

The IDR plans can be especially helpful for those who are having trouble finding work or are pursuing a career in a low-paying industry. In addition to making your monthly payments more affordable, with four of the IDR plans, the remainder of your loan balance could be forgiven after you make payments for 20 to 25 years.

If you’re on an IDR plan, or think being able to switch to an IDR plan could be helpful in the future, you may not want to refinance your federal student loans. After refinancing, your new private loan won’t be eligible for federal IDR plans.

3. Do you want to use a federal loan forgiveness or cancellation program?

Your federal student loans may be eligible for a forgiveness program, such as the Public Service Loan Forgiveness (PSLF) program or the Perkins loan cancellation program. Private student loans aren’t eligible for these programs.

If you’re considering one of the programs, you may want to research all the eligibility requirements, including which loans qualify for the program and the requirements for receiving forgiveness or cancellation.

Those who qualify, or who have already been making eligible payments towards one of the programs, may not want to refinance the loans that will be forgiven or canceled.

However, private student loans don’t qualify for the programs and there are different types of federal student loans, some of which may not be eligible for the program you’re pursuing. You may want to consider refinancing those loans.

4. Can you save money by lowering your interest rate?

Congress sets the interest rate on federal student loans, and if you previously took out a private student loan your interest rate could depend on the lender, your creditworthiness and your cosigner if you had one.

When you refinance your student loans, the interest rate of the new loan can also vary depending on your current creditworthiness, the lender and a cosigner.

Lowering your interest rate can save you money in interest payments over the lifetime of your loan and may lead to lower monthly payments depending on your new loan’s term (the amount of time you have to repay the loan).

If you’re only able to get approved for refinancing with a higher interest rate than you currently have, then generally it won’t make sense to go through with the refinancing.

5. What is your credit score?

Your eligibility for refinancing student loans, and the rate and terms you’ll receive, may depend in part on your credit score. Having a high credit score can help you get better rates and terms, and the best offers may go to those with a score in the good to excellent range (e.g., a FICO score above 670). Some refinancing lenders also have a minimum credit score requirement that you must exceed to be eligible for a loan.

If your credit score has increased since you first took out a private student loan, that may be an indication that you could qualify for a lower interest rate now. On the other hand, if it’s dropped, you may not qualify for a lower rate and might want to focus on building your credit and increasing your score before refinancing.

6. What is your income, and what other financial obligations do you have?

Along with a credit score, lenders may look at your income relative to your overall required monthly payments — your debt-to-income ratio. DTI can be an important factor in determining your eligibility for refinancing and your interest rate offer. If your rent or mortgage, loan payments, credit card bills and other monthly obligations make up a large portion of your monthly income, it could be more difficult to qualify for a good rate.

Applicants who have a high credit score and want to refinance their student loans but don’t qualify for a low rate may want to focus on paying down debts, decreasing other financial obligations and increasing their income before reapplying.

7. What could happen if you can’t afford your loan payments?

Federal student loans offer prescribed options for borrowers who have trouble making payments. You may be eligible for an income-driven plan, which can lower your payment amount. Or, you might be able to temporarily stop making payments by putting your loans into deferment or forbearance if you return to school, join the Peace Corps, lose your job, have a medical emergency or meet other criteria.

Although private student loan companies may offer borrowers some hardship options, they vary by lender, and some lenders determine eligibility on a case-by-case basis. If you think you may have trouble making payments later, and particularly if you don’t have an emergency fund to fall back on, you may want to hold off on refinancing your federal student loans.

If you do decide to refinance, carefully review different companies’ hardship policies. You may want to choose the lender with the most favorable or lenient policies, even if it isn’t the one that offers you the lowest rate.

To lower the risk of refinancing, you could choose to refinance at a longer loan term. Although a longer term could result in a slightly higher interest rate, it could also lower your monthly payments. You can always pay more than the required amount to pay off your loan early, but the lower required payment gives you more flexibility if you run into financial trouble.

8. Will you need a cosigner to qualify?

Applicants who have trouble qualifying for refinancing on their own may be able to add a creditworthy cosigner to their application. Even if you qualify on your own, having a creditworthy cosigner could help you get a lower rate.

You can ask any creditworthy person to cosign as long as they meet the lender’s eligibility requirements, although you may feel most comfortable asking a family member. That person takes on a risk by cosigning your loan, because they will be legally liable for the student loan if you don’t pay.

The liability could make it more difficult for the cosigner to qualify for financing elsewhere, and missed payments could hurt the cosigner’s credit. If you stop making payments altogether, both your and your cosigner’s credit could take major hits, and you both might start getting collection calls.

If you do need a cosigner to qualify, you could look for a student loan refinancing lender that offers a cosigner release. Here’s how it works: After making a series of full and on-time payments, you can apply to take over the loan. You’ll need to pass a credit check and qualify for the loan on your own, and if you do, the cosigner will be taken off the loan and you can continue with the same rate and terms.

9. What will the lender do if something happens to you or your cosigner?

With federal student loans, any remaining debt can be discharged if the borrower, or the student for whom a parent PLUS loan was taken out, dies or becomes permanently and totally disabled.

Some private lenders offer a similar arrangement to borrowers, but others may handle these situations on a case-by-case basis and don’t guarantee a discharge. If the debt isn’t discharged, you could be leaving your cosigner with a large bill to pay, or it could be taken from your estate.

Also, review the contract to see what happens if a cosigner dies or declares bankruptcy. In the past, it was a common practice for lenders to place a student loan in default when this happened, meaning you’ll owe the entire balance right away even if you had been making your monthly payments on time. Automatic defaults aren’t as common anymore, but it’s still something you should double check.

10. Which student loans should you refinance?

Based on your circumstances and answers to the questions above, you may find that you want to refinance some of your student loans and leave the others as is.

You may also be able to accomplish some of your goals, such as simplifying your monthly payments, by consolidating federal student loans. Consolidation allows you to combine multiple federal student loans into one loan, and you can choose which servicer you’d like to work with for your new loan.

However, consolidation is only available on federal student loans, and it won’t necessarily save you money, because your new loan will have the weighted average interest rate of the loans you’re consolidating. So if the largest loan you’re consolidating has a lower interest rate than the rates on your loans with smaller balances, the weighted average may produce a lower overall interest rate on your consolidation loan. On the flip side, if your loans with the largest balances also have the highest interest rates, you could actually end up with a higher interest rate on your consolidation loan.

If you decide to refinance additional loans later, or want to refinance all your loans together at some point, you may be able to do that as well. Even if you refinance all your loans now, you may want to refinance again if interest rates drop or your creditworthiness improves.

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College Students and Recent Grads, Reviews, Student Loan ReFi

SoFi Parent PLUS Loan Refinance Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

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Senior Couple Talking To Financial Advisor At Home

Updated August 21, 2017

Are you a parent who wanted to help your child finance his or her education, and ended up taking out more loans than anticipated? Many parents find themselves in a precarious situation as they try to plan for retirement and while balancing student loan debt.

If you’re looking to save on the amount of interest you’re paying, SoFi‘s Parent PLUS loan refinance program may be right for you.

Details of the Parent PLUS Loan

You can refinance a minimum of $5,000 under SoFi. Fixed rates range from 3.20% to 5.82% APR and variable rates range from 2.99% – 5.82% APR(these rates assume you enroll in autopayment).

Terms of 5, 7, 10, and 15 years are available. Variable rates on terms of 5, 7, and 10 years are capped at 8.95%, while the 15 year term is capped at 9.95%.

How Does the Parent PLUS Loan From SoFi Compare to a Federal PLUS Loan?

The interest rate for Federal Direct PLUS Loans disbursed on or after July 1st, 2015 and before July 1st, 2016 is 6.84%. During much of the 2000s, interest rates were higher. Currently, interest rates are fixed – variable rates are unavailable.

Most people are looking to refinance to save money, and SoFi offers very competitive rates compared with the Direct PLUS Loan, especially on variable rates.

While there are no fees to refinance, you should calculate your estimated savings before going through the process. Be aware if you do refinance, you’ll lose out on certain benefits that come with having Federal student loans, such as deferment, forbearance, and various repayment options.

PLUS loans made to parents are eligible for the Graduated or Extended Repayment Plans, and Direct PLUS loans are also eligible for forgiveness. In some cases, PLUS loans can be discharged due to the death of the borrower (or student).

Private loans often don’t extend these same benefits. In fact,SoFi explicitly states on its legal page that this loan “is not discharged in the event of death or permanent disability of the borrower or student on whose behalf the loan is taken out.”

Eligibility Requirements

You must be a U.S. citizen or permanent resident and employed to be approved. SoFi is unable to lend in Nevada, and variable rates aren’t offered in Illinois, Ohio, or Tennessee. The loans must have been used to obtain at least a Bachelor’s degree with an eligible school as well.

There are no specific credit score requirements as SoFi tries to take a broader view of borrowers. It focuses on income and credit history instead.

Application Process and Documents Needed

The application process to refinance a PLUS Loan with SoFi is easy and can be done completely online. The application takes around 15 minutes to complete, and you’ll know whether or not you qualify by going through the pre-approval process first. During this portion of the application, a soft credit inquiry is used. If you decide to move forward with the loan offered to you, a hard credit inquiry will be used.

You’ll be asked to upload a few documents, so it’s a good idea to have the following ready to go:

  • Proof of residence – ID with matching address, otherwise a utility bill dated within the last 60 days is okay
  • Proof of income – most recent pay stubs
  • Proof of citizenship – a passport or birth certificate can be provided
  • Verification of loans – most recent loan statements for the loans you’re refinancing

Once you submit this documentation, SoFi review team gets to work on evaluating your loan. If no other documentation is needed, reviews can take anywhere from 2 to 3 weeks to complete.

The Fine Print

There isn’t an origination fee or application fee, and there are no prepayment penalties. Rates are determined on a number of factors, including the term you choose, your income, and your credit history.

There are late fees associated with the loan. The Parent PLUS Refinance program is currently offered through SoFi lending partner, Mohela, and it assesses any fees owed. When you receive the paperwork for the loan, the fees can be found under the disclosures.

Repayment Assistance Options

If you’re struggling to repay the loan after refinancing with SoFi, we recommend you contact a representative and make them aware of the situation. The worst thing you can do with any loan is not make a payment.

SoFi offers unemployment protection on a case-by-case basis, during which payments can be paused for a period of 3 to 12 months.

Pros and Cons of SoFi Parent PLUS Loan

Pro: SoFi offers much better rates than the 6.84% fixed rate that comes with Direct PLUS loans. If you have a higher interest rate – around 8% – you’ll stand to benefit even more.

Con: As we mentioned, refinancing means losing out on benefits associated with Federal student loans. If you’re not as concerned about needing repayment assistance, the savings might be enough to make refinancing worthwhile.

Pro: SoFi also offers variable interest rates, whereas the most recent Direct PLUS loans don’t. Variable rates can be tricky, though – SoFi says rates may change on a monthly basis. If you value stability and peace of mind, variable rates may not be for you. If you’re trying to pay off your balance quicker, and a lower interest rate would help, then it might be worth considering this option.

Con: You may have to extend the repayment term to get a lower monthly payment, as SoFi offers terms up to 15 years. Unfortunately, this increases the amount of interest you’ll pay over the life of the loan. It’s important to use a calculator to estimate how much your savings will be to make sure refinancing is worth it. For example, if you have less than 5 years remaining on your loan, refinancing may not save you a lot of money.

Pro: SoFi offers unemployment protection, and you can also take advantage of SoFi career assistance program. If you or your child is experiencing trouble finding employment, it will connect you with its network of alumni and give you tools and tips to succeed in your job search.



on SoFi’s secure website

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Other Parent PLUS Refinance Alternative

If you don’t qualify with SoFi, you can try these lenders that also offer refinancing options:

CommonBond: Fixed APRs range from 3.67% to 7.25%, and variable APRs range start at 2.50%, and terms offered are 5, 10, 15, and 20 years. CommonBond also has hybrid APRs. Only a 10 year term is offered with this choice; it starts off as fixed for 5 years, and changes over to variable for 5 years. There are no origination fees or application fees, no prepayment penalty, and CommonBond actually allows you to transfer your loan to your child (which isn’t allowed with Federal loans). You can borrow a maximum of $500,000.



on CommonBond’s secure website

Citizens Bank (RI): Citizens Bank (RI) refinances Parent PLUS and Direct PLUS loans through its Education Refinance program. The minimum amount you can refinance is $1,000 and up to $90,000 for Bachelor’s degrees and below, $110,000 for graduate and doctoral degrees, and $180,000 for professional degrees. For a Bachelor’s degree and above, you must have made 3 consecutive monthly payments to refinance. For anything less than a Bachelor’s degree, you must have made 12 consecutive monthly payments. The loan you’re refinancing must be in repayment status and can’t be enrolled in an Income-Based Repayment plan. Fixed APRs start at 3.20%. Terms of 5, 10, 15, or 20 years are offered. You need a minimum income of $24,000 to qualify.

Citizens Bank


on Citizens Bank (RI)’s secure website

Be sure to shop around as there are other lenders out there that will refinance Parent PLUS loans – you want to make sure you’re getting the best rates and terms available to you so you can save the most. Shopping around within 30 days will only count as one credit inquiry, so your credit won’t get penalized heavily. Take advantage of this and lessen the burden of student loan payments so you can focus on saving for your future.

* We’ll receive a referral fee if you click on the “Apply Now” buttons in this post. This does not impact our rankings or recommendations You can learn more about how our site is financed here.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.


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Refinancing rates from 1.99% APR. Checking your rates won’t affect your credit score.