What Services Does FedLoan Servicing Offer to Borrowers?
FedLoan is one of several student loan servicers that works with the U.S. Department of Education (DOE) to help students manage, repay, and consolidate their student loan debt. Currently, FedLoan works with over seven million student borrowers, including TEACH grant recipients. Here, we'll go over what you can expect if you've been assigned to FedLoan Servicing and take a deeper look at the different services FedLoan offers when it comes to addressing your student loans.
How Does FedLoan Work?
When you take out a loan for school, the DOE will assign you to a loan servicer. In turn, this loan servicer will help you manage your student debt and understand your repayment options. Best of all, the DOE will automatically assign you to a servicer, so there’s no need to take any additional steps. If you're assigned to FedLoan, they'll let you know through either email, mail, or a combination of the two.
Typically, you don't have to worry about repaying your loan while you're still in school, so, during that time, FedLoan will keep you aware of the balance of your loan and any interest that may be accruing. In fact, the only reasons you'll need to worry about contacting them before you graduate are if:
- You need to change your contact information or student status.
- You received a larger loan than you needed and want to return some of your funds. (Pro Tip: This is a great way to keep from incurring additional interest in the long run.)
FedLoan also offers a number of free resources, like Smart Borrowing Tips, that you can take advantage of while you're still in school. Although it may seem daunting, it’s never a bad idea to read up on your loans and repayment options before the time comes to act. Doing so can help you avoid making decisions that result in higher interest rates or monthly repayment amounts.
Post-Graduation Grace Period
Once you either graduate, leave school, or drop below a certain number of credit hours (half-time), you'll kick off a six-month grace period. During this time, you won't yet be required to begin repaying your loan — however, it's definitely not a bad idea to at least begin paying down interest if you can afford to do so.
During your grace period, FedLoan offers a number of tools you can use to help prepare for your upcoming repayment period. In addition to setting up billing notices, you’ll be able to estimate your monthly bill; get help understanding the bill’s breakdown; and explore repayment plan options, including extended payment plans. Additionally, you can apply for Income-Driven Repayment, which can result in a monthly payment of as little as $0 based on how much you earn.
You should receive your first bill near the end of your six-month grace period, usually 20 days or so before it's actually due. Once you've got your payment plan in place, you can also sign up for recurring monthly payments, which are billed directly to your debit card, so that you never have to worry about missing a deadline.
The only exception? PLUS loans. These loans are granted to eligible parents, professionals, or graduate students directly from the Department of Education. In the case of PLUS loans, your repayment obligations begin as soon as all of the loan money is received by your school. It's also worth noting that these types of loans start incurring interest pretty much as soon as you use them, whether you're still in school or not.
On Repayment Services
FedLoan also offers a number of services for graduates who have already begun paying off their loan debt, including information about the ways you can pay your loan bills. You'll find that you have plenty of options in this regard: payments can be made online, through the mail, by phone, via scheduled payments, and more. Additionally, you can learn more about how to pay off parts of your loan in advance — or completely — which, again, is a great way to save on interest charges.
Not sure if consolidation is the right move for you? FedLoan offers helpful quizzes that can help you determine if that’s the best course of action. If you have multiple loans, or high loan debt, consolidating may be a good way to lower your interest rates and monthly payments. If that’s not the best path for you, targeting your payments — that is, paying off certain loans first — is also a good way to make a dent in your student loan debt balance.
Need a primer on the basics? Without a doubt, confronting student loan debt can be overwhelming. So, with this in mind, FedLoan provides users with a number of helpful educational resources as well as a handy financial glossary and a series of educational videos, all of which will help you understand your loans and repayment plan more thoroughly.
Financial Hardship Tools
Having a hard time making your monthly payments? Depending on what type of loan or loans you have, you may want to look into either deferment or forbearance. While these options can give you some time to get more money together, it’s essential that you understand the implications they may or may not have on any interest you incur in the meantime. Pro Tip: If you’re having a particularly difficult month or temporary setback, you can log on to your account and change your payment due date.
Additionally, your post-graduate career path may impact your repayment ability or plan. For example:
Public Service and Nonprofit Employees: You may be able to have your loan drastically lowered or eliminated through Public Service Loan Forgiveness (PSLF). This opinion is a great one to explore after you make 120 qualifying payments on a repayment plan if you are employed full-time with a public service organization or are a full-time AmeriCorps or Peace Corps volunteer.
U.S. Military Service: As a service member, you may also qualify to have your interest, costs, and fees capped at 6% while on active duty through the Service Members Civil Relief Act (SCRA). You may also qualify for other forgiveness or reduction programs if you are a teacher or have a qualifying disability.
FedLoan also outlines other types of loan forgiveness or discharge, which, although less common, are certainly options some folks choose to pursue. More recently, services like FedLoan have also created several options for those who were impacted by COVID-19. Long story short, there is no one-size-fits-all pathway. When it comes to student loan debt, any repayment process will be shaped by your personal circumstances.