- Customer Service: representatives can be reached with questions via online chat, call or email
- Payment Options: direct debit, phone, mail and online. Additionally, FL offers a 0.25% interest reduction rate for people who enroll in direct debit
- Unlimited Monthly Payments
- Eligibility Assessment: this online tool helps borrowers understand their options regarding forbearance or deferment.
- Income Based Repayment Plan: FL accepts applications for qualified borrowers to have their monthly payments reduced based on their income. These plans set a ceiling for loan payment requirements, 10% to 20% of monthly income.
- Consolidation: FL offers consolidation services for people with multiple loans from different providers. Consolidation offers the benefit of only needing to manage one balance from one servicer.
- Targeting Payments: Borrowers can specify where their direct debit goes. For example, it can be directed to their loan segment with the highest interest rate.
- Better Business Bureau: 97% Negative Reviews
- Consumer Affairs: 1/5 stars
- Lendedu.com: 1.5/5 stars
There is little praise for FL to be found in online testimonials. The most common positive experience is a result of sympathy from the call center staff when processing issues.
According to Boston Student Loan Lawyer, Adam Minsky, ESQ. 64% of his clients serviced by FL experienced at least one serious problem in 2016. He reports that there is a breadth of issues as well as depth in volume for each. The most common issues described are related to a lack of correct information and delays in processing requests. Because student loan payments accrue interest, delays in correcting terms of the agreement usually increase the amount owed.
1. Payment Processing Times
Being able to make payments is the most crucial step in eliminating a loan. Borrowers report frequent and severe problems with making consistent payments. It is important to keep on top of payments, whether they are recurring or one-time, in order to ensure they have been processed correctly. Even if a representative has verbally accepted a payment, bank statements should be used to confirm that the amount has been processed. Furthermore, once the amount has been charged, it is important to confirm that the payment has been applied to the loan balance (and is not pending) and to the correct portion of the loan.
- Direct Debit Problem – One borrower attempted to set up direct debit for their payments and received confirmation from FL that the process was complete. However, the payments did not debit as planned and he received delinquent notices on his account. Others reported problems arising with direct debit despite having successfully used the service for previous consecutive months.
- Pending Payment Problem – The same borrower also made a payment which remained in pending status for two weeks before being credited to his account.
- Paying Ahead of Schedule – If a person wishes to pay more than their minimum monthly requirement and/or do so ahead of schedule, this takes the place of their monthly payment. If the person’s intent was to pay down more of their principal loan balance to get ahead of interest accrual, they are unable. In order to remedy this problem, they must manually make another payment rather than having the regular monthly amount debited or requested.
2. General Customer Service Interactions
- Customer service representatives admit that FL has issues with payment systems
- Some people report that they experienced rude and unhelpful replies from FedLoan call center workers
- Callers report asking the same question to multiple representatives and being told different information
3. Credit Impact
- False Information – Because of FL’s reported issues with payment management, they sometimes report incorrect information that negatively impacts the borrower’s credit reports. It is important for borrowers to monitor their credit scores to ensure that no incorrect penalties have been added. If an item is incorrectly added to a borrower’s credit report, it is important to follow up with FL as well as the affected credit bureaus. FL has a specific department (and contact address) dedicated to credit dispute issues.
4. Difficulty Monitoring Account
- Unclear Account Status – When calling FL, borrowers report that the staff is unable to clearly identify, source and/or repair account issues such as missing payments. The representatives offer to contact the borrower once correct information becomes available, but this is rarely completed.
- Incompatible with Mint.com – Mint.com is a personal budgeting service that many people use to track their incoming and outgoing account balances. One borrower reported that his FL balance could not be added as a tracked account on Mint.com but that his loan serviced by Sallie Mae (another loan servicer) was able to be added.
5. Incorrect Eligibility Determination
- Income Driven Repayment – Applications for income driven repayment plans have been denied when the applicant should have been accepted. Applicants who are denied incorrectly are eligible for reconsideration, but there is a delay for reprocessing. Additionally, FL has also been known to remove people from their income driven repayment plan due to ‘failure to recertify’ even when the borrower has verified their eligible income by the correct deadline.
- Public Service Loan Forgiveness (PSLF) – Some borrowers report being incorrectly denied the opportunity to enroll in PSLF, or at least do so on the first attempt. Others report that their monthly payments were not correctly attributed to the PSLF requirement of 120 months, thereby setting back their eligibility for forgiveness and requiring them to make more payments than necessary before completion. If this issue goes unresolved for long enough, borrowers may no longer feel completing the 10 year service is worth the loan forgiveness. This causes them to lose out on a potentially beneficial service and instead make higher payments.
- Consolidation – FL has also processed consolidation applications where it was not legally permitted.
6. Accounting Errors
- Consolidation – One person reported that after consolidating their loans and being assigned to FL for servicing, their balance doubled. When consolidating, borrowers should confirm that all loans have been accounted for, so they do not unknowingly miss a portion of their loan that could be accruing high interest.
- Refinancing – A borrower requested to refinance some loans with high interest rates. However, the change was applied to the total loan balance, including the ones with a lower rate than the refinance rate.
- Automatic Payments – FL has attempted to collect automatic payments from borrowers who had previously requested deferment (and did not have the funds available). This caused the borrower to receive additional fees for insufficient funds.
- Adding Spousal Income – FL has incorrectly included spousal income for some borrowers when re-certifying candidates for income based repayment plans, resulting in a higher amount due monthly.
7. Technical Issues
- One reviewer reported consistently being unable to update their email address online. The same user also reported being told that their signature did not print correctly after faxing documents.
- FL may be sending warning letters to all borrowers who are consolidating their loans, saying that critical information is missing, even though that is rarely the case.
Advice for Contacting
In order to initiate a voluntary change to a repayment plan or resolve a payment error, contact FL directly. Have all information prepared before contacting a representative. Keep records of all documentation as it is received. Contact FL as soon as possible regarding any questions or concerns. Any delays may cause inconsistencies to have a greater effect. Additionally, changes may take a long time even once they have been initiated. Based on the numerous negative reviews online, successful completion of this task may require multiple attempts.
If the issue is urgent, the borrower can submit the request via multiple methods of communication (phone, fax, mail) in the hopes of receiving a response. Online reviews suggest repeated contact (with different employees) may increase chances of gaining the necessary information.
FL is the only student loan servicer designated by the United States Department of Education to manage loans of people in progress towards Public Service Loan Forgiveness. Public Service Loan Forgiveness is a program which eliminates the remainder on Direct Loans after 120 qualifying monthly payments (10 years) while working full-time for an approved employer. These employees of government and nonprofit organizations tend to have lower monthly incomes than other professions and can be negatively affected by the inaccurate and inefficient processes at FL.
FL has a free app offered for both iOS and Android phones. User reviews report frequent crashes, but it may be worth downloading in order to make frequent account checks more of a habit.
If a borrower is not pursuing Student Loan Forgiveness, they can apply to consolidate or refinance their loans under another servicer. These options may help borrowers who are unable to resolve severe issues with FL. However, refinancing may require a certain credit score or eliminate the possibility to enroll in certain loan forgiveness programs for public service work. There are websites and online tools that compare packages for refinancing student loans and can help individuals choose the correct plan for their needs.
Paying off loans ahead of schedule is another way to minimize the potential number of troublesome interactions with FedLoan. This is not possible for everyone, but there are multiple ways to achieve it. The first is to make additional payments towards your loan principal as soon as extra income becomes available. When doing so, the payment needs to be directed to specific loans, otherwise it will go towards the next upcoming month’s payment. These funds are held in “paid ahead” status. Targeting highest interest loans first is another way to achieve total repayment earlier than expected. By paying off higher interest loans sooner, they will accrue interest for a shorter period of time, reducing the total amount owed over the lifetime of the loan.
How to Escalate Issues
The Student Aid Ombudsman Group is a neutral resource provided by the United States Department of Education to resolve disputes between borrowers and loan servicers. In order to file a complaint, a borrower should have details of their loan and servicer information ready to provide. Before filing a complaint with the Student Aid Ombudsman Group, a borrower must have first attempted to resolve the issue with their student loan servicer directly. Their contact information is:
- Address: U.S. Department of Education, FSA Ombudsman Group, 830 First Street, N.E., Mail Stop 5144, Washington, DC 20202-5144
- Phone Number: 877-557-2575
- Fax Number: 202-275-0549
Individuals can contact their Senator or Representative for assistance. State Attorney Generals can also be contacted with complaints.
Borrowers can also submit a complaint to the Federal Consumer Financial Protection Bureau.
In order to bring attention to the problems with student loan servicing, borrowers can reach out to news and print media outlets on a local and national level.
- Website: https://myfedloan.org
- Hours of Operation: 8AM – 9PM EST
- Domestic Phone Number: 800-699-2908
- International Phone Number: 717-720-1985
- Fax Number: 717-720-1628
- Email: firstname.lastname@example.org
- Credit Dispute Address: FedLoan Servicing Credit, P.O. Box 60610, Harrisburg, PA 17106-0610
How to Make a Payment
There are three main ways to make a one-time payment:
- Phone: 800-699-2908
- Mail: P.O. Box 69184, Harrisburg, PA 17106-9184
- Online: https://myfedloan.org/borrowers/payments-billing/