FedLoan was conceived by Congress with aims to encourage people to enter and keep working full time in Public Service jobs. Under the Public Service Forgiveness, borrowers, due to their eligible Federal Student loans will have to make 120 payments on the loans with respect to certain repayment plans while being employed full-time by certain public service employers. This way, they, i.e. the borrowers will qualify for forgiveness of the remaining balance.
Established by the Pennsylvania Higher Education Assistance Agency (PHEAA), FedLoan is meant to support the United States Department of Education. The main aim is to aid the U.S. Department of Education to service student loans which are owned by the Federal Government. FedLoan Servicing and American Education Services (AES) are the two means through which Pennsylvania Higher Education Assistance Agency conducts its loan servicing. And this happens nationally.
Department of Education has given approval to FedLoan Servicing despite being stringent about giving out approvals and allows FedLoan to service these loans. FedLoan also provides immense support to its borrowers by making managing student loans easy and convenient. The Department of Education as also chosen FedLoan Servicing as the only federal servicer which is responsible for monitoring and tracking all the borrowers that are eligible for Public Service Forgiveness (PSLF).
So basically, FedLoan Servicing is the Pennsylvania Higher Education Assistance Agency conducting its student loan servicing operations for federally-owned loans.
Understanding FedLoan Student Loans
MyFedLoan offers all kinds of information for individuals to know everything they need to about the federal loans in their official website.
FedLoan Life Cycle
This is explained in 6 steps.
- The individual takes out a loan (The person must complete the Free Application for Federal Student Aid every year. Then the Department of Education processes the Free Application. And finally the individual signs the Master Promissory Note.)
- The Loan Funds arrive (The individual is assigned a server after the Loan funds arrive.)
- No payments are required to be made by the individual when he or she is still in school.
- After leaving school, the individual must complete exit counseling which is a session that explains to the individual about his or her loans and gives them an overview of how the repayments are made. They thus enter the grace period.
- After the grace period, it is finally time for the individual to start the repayment process. FedLoan will send monthly bills and the student will get prior notice 20 days before so he or she will be prepared.
- And finally the Individual makes full payment or FedLoan does promise serious consequences if the repayments are skipped or not made.
FedLoan Loan Types
There are three types of Federal Loans that FedLoan gives out.
- Federal Subsidised Loan: It is given to an individual based on their financial need. The school the individual attends must be accredited by the Department of Education. The Individual’s interests for this loan type are paid by the government is the individual is still in school, is in grace period or has an authorised deferment. He or she must not lose the subsidy. This loan also comes with various repayment plans and options for postponing or reducing payments. Forgiveness and discharge of the loan is also available but the loan has limits that may not cover the full cost of attendance.
- Federal Unsubsidised Loan: It is given to individuals based on their unmet financial needs. Direct PLUS loans are given to graduate and professional students and parents and they are based on creditworthiness and will require an endorser. The school the individual attends must be accredited by the Department of Education. The Direct Subsidised Loan offers a grace period that is exclusive to just itself. For Direct PLUS loans made on or after July 1, 2008, to an individual student borrower, a deferment while the individual is still in school and to cover the 6-month period after the individual ceases to be enrolled at least half-time will be granted automatically. This loan also comes with various repayment plans and options for postponing or reducing payments. Forgiveness and discharge of the loan are also available but the loan has limits that may not cover the full cost of attendance. Direct PLUS loans are limited to the cost of attendance minus the amount of any aid the individual may have received.
- Alternative Private Loans: It is given to individuals based on their unmet financial needs. It is also based on an individual’s creditworthiness and it will require a co-signer. It will fill the gaps in the cost of attendance when all other aid options such as federal loans, grants, scholarships etc. have been used up. The individual may be required to make payments while still in school. The individual may also have higher interest rates when compared to other loans. The loan may not offer a grace period as well. While federal loans come with various repayment plans and options for postponing or reducing payments, this loan has fewer and less flexible repayment options. Postponing or reducing payments also may not be possible. Will have more fee than federal loans and discharge and forgiveness will not be available.
The individual doesn’t always have to pay back in interest unless the loan type or the repayment plans demands for it. In such cases, the interest starts from the day one of the payments made by FedLoan Services.
For Non-Subsidised Student Loans, the interest is counted from the day the disbursement begins till the day the individual makes the final repayment.
For Subsidized Student Loans, the interest is counted from the day of the disbursement begins till the day the individual makes the final payment unless he or she is in a period of deferment. In the case of an Individual’s in-school status and if an individual possesses an approved deferment, the Department of Education will pay the accrued interest on the Student Subsidized loan.
FedLoan also provides exit counseling to prepare individuals to make repayments while still in school. To prepare them for making repayments before leaving school. This counseling happens when the individual has graduated, has withdrawn or dropped below half-time status. It is a learning opportunity for these individuals that provides them with information about their rights and responsibilities as borrowers. During Exit counseling, the individual may also be asked to pick a repayment plan.
FedLoan Repayment Plans
- Standard Repayment: An individual can choose this if he or she can afford to make fixed monthly payments and make quick payoffs.
- Pay as you Earn (PAYE): When an individual has a large student loan to pay off and doesn’t have a good income to do so, he or she can choose this option.
- Income-Based payment: This payment can be made based on the individual’s monthly income. It comes with an extended repayment period.
- Income-Contingent Repayment: The payment is based on the individual’s income, family size and loan debt and it also comes with extended repayment period.
- Revised Pay as you Earn: Payment is based on the Individual’s household income and family size. The spouse will also have to pay up, if applicable. This also comes with an extended payment period.
- Graduated Payment: The individual gradually makes higher payments with the future and hence his or her monthly payments are relatively small.
- Extended Standard Repayment: The individual must make fixed monthly payments but with an extended repayment time. This can be chosen when no other repayment plan can be afforded by the individual
- Extended Graduated Repayment: The individual will get extended repayment period but he or she will have to gradually pay more as the months go by based on their income.
- Income-Sensitive Repayment: The individual gets an extended repayment period and his or her monthly payments are also low if he or she chooses the Income-Sensitive Repayment.
FedLoan Special Programs
The Public Service Loan Forgiveness Program (PSLF) was formed to urge individuals to enter and keep working in full-time public service employment. The program allows an individual to gain forgiveness of the remaining balance of his or her Direct Loans after he or she has managed to make upto 120 qualifying monthly payments while still working full time for a resourceful employer. To receive forgiveness, the individual must still be employed with a qualifying employer at the time he or she applies for and receives forgiveness for his or her loans. The qualifiers are;
- A government Organisation
- Peace Corps or AmeriCorps
- A Non-Profit, Tax Exempt Organisation
- A Private, Non-Profit Organisation
TEACH Grant Eligible Program of Study, where as the servicer of an individual’s grants, FedLoan will keep track of the potential interest that he or she will have to repay if his or her grants are ever transformed to loans. TEACH Grant Eligible Program of Study will send the individuals emails every three months and an annual summary of the interest.
FedLoan Customer Service
FedLoan allows its customers to Login and gains information from their website. They are available on famous social networking sites like Twitter. They have mobile apps that are available for Apple and Android. They answer FAQs, they provide the customers with interest calculators and schedule estimators.
MyFedLoan or FedLoan servicing is one of the major organizations that backs the Department of Education of the United States of America to service students who have taken student federal loans from the government and help them make timely repayments. A person can gain all the information about FedLoan services and their several repayment options by creating an account on their official website. This is known as Account Access and the borrower of the loan will have complete information and access to the loan he or she has taken and will be able to keep tabs on the payments that need to be made, the transactions, the account settings, payment schedules, and so on. This comes under the online services provided by FedLoan where the loan borrower can make loan repayments, look at their loan details and so on with the help of the account that he or she has opened on FedLoan.
Creating an Account on FedLoan
Creating an account on FedLoan in order to gain access to all the data and information provided by the organization to help students who have taken federal loans from the government for their education can happen in five simple steps. Each step will be dedicated to a certain purpose where the user will have to disclose certain personal information and financial information in order to go ahead with the process of opening an account. Opening a FedLoan account or having Account Access on FedLoan can be very beneficial to the borrowers since they will know all about the repayment options provided by FedLoan.
The the first step of creating a FedLoan account, the user must fill in the following details. This step asks for personal information.
- The user should first fill in his or her first name.
- The user has to then proceed to fill in his or her last name.
- The user has to give his or her Email address that he or she frequently uses.
- The user has to mention his or her date of birth, based on the order that FedLoan requires.
- The user has to then either give his or her bank account number or his or her social security number.
- The user has to finally confirm his or her bank account number or the social security number that he or she has provided.
In the second step, the user has to fill in a username and password of his or her choice. Then, for security and safety purposes the user will be required to answer some security questions that will be asked by FedLoan so that in the future if there is a problem regarding logging into the FedLoan account, then he or she can gain access by answering the chosen security question in this particular step. Then in the fourth step, the user has to confirm all the important details he or she has given until now to FedLoan so that no issues arise in the future. In the final step, the user will get a confirmation link to his or her email where he or she can log into his or her FedLoan account for the first time.