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FedLoan Servicing |Real Tips

4 couple holding credit cardFedloan Servicing is established by PHEAA (Pennsylvania Higher Education Assistance Agency) to conduct student loan servicing for federally owned loans.

It does servicing for the Federal Student Aid Program, which is an office of the U.S. Department of Education Initiative.

A federal loan is a loan funded by the federal government to help pay for the education of its citizens. A federal student loan is borrowed money that has to be repaid with interest.

When it comes to repaying of federal student loan, there’s a lot to factors to be considered. Realizing the details of repayment can save time and money.

It is pertinent to find out:

Repayment of a Federal Student Loan is mandatory regardless of the circumstances of the borrower. The loan can never be cancelled, even in case of unemployment of the borrower after their studies or because the borrower dropped out.

The only possibility of cancelling a federal loan is in a situation where the student couldn’t complete his education because of the closure of his school.

FedLoan Payment

In most cases the student doesn’t have to start repayment until he completes his college or drops below half-time employment. However in a PLUS loan, the repayment starts once the loan amount is fully paid out to the borrower.

At the time of availing the loan, the corresponding loan servicer or lender usually provides the student with a repayment schedule. This schedule clearly mentions the start of the first repayment due date, the frequency and the amount of each payment. The availability of grace period depends upon the loan servicer.

The concept of “grace period” gives a student ample time to find a suitable job and get settled and also to choose a repayment plan that suits him the best. In most cases the interest gets accrued during the grace period.

Repayments are often made in monthly patterns and are usually depends on the type of loan, the amount of money borrowed, the interest rate on loan and the repayment plan one chooses.

How to make a payment?

The U.S. Department of Education (ED) offers an array of loan servicers to handle the billing and other services on loans for the William D. Ford Federal Direct Loan (Direct Loan) Program and for loans that were made under the Federal Family Education Loan (FFEL) Program and those that the ED later purchased.

In case of Direct Loans and FFEL loans owned by ED, the repayment has to be done to the loan servicer. The Loan Servicer usually gives out the repayment schedule for the loan taken.

When it comes to FFEL loans not owned by ED, the loans are to be repaid to the actual lender, who could be a bank or any other financial institution who dispersed the loan.

In case of Federal Perkins Loans the loan servicer usually happens to be the School that the student was attending at the time of obtaining the loan.

In situations where a borrower has some difficulty in payment of the loan, he might contact the lender or the loan servicer at the earliest and sort out the issue and chose a repayment plan that suits him the best. He can also discuss options such as deferment or forbearance or loan consolidation.

But one thing has to be kept in mind that in case of default of payment, it goes to the record of credit rating bureau and might has serious impact on the credit scores in the future that have ill-affects in a person’s financial stature.

4 student thinking of her debt paymentFedloan Student Loans:

The U.S. Department of Education has two exclusive federal student loan programs:

The William D. Ford Federal Direct Loan (Direct Loan) Program is the largest federal student loan program. Under this program, the U.S. Department of Education is the actual lender. There are four types of Direct Loans available:    

  • Direct Subsidized Loans are loans made to eligible undergraduate students who require financial need to help cover the costs of higher education at a college or career school. 
  • Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but in this case, the student does not have to prove financial need to be eligible for the loan.
  • Direct PLUS Loans are loans made to graduate or professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid.
  • Direct Consolidation Loans allows combining all of the eligible federal student loans into a single loan with a single loan servicer.

The Federal Perkins Loan Program is a school-based loan program for undergraduates and graduate students with special financial need. Under this program, the school is lender and the repayment has also to be made to the school.

Permissible Loan Amount for Students:

For an undergraduate student: 

Up to $5,500 per year in Perkins Loans depending on an individual’s financial need.

$5,500 to $12,500 per year in Direct Subsidized Loans and Direct Unsubsidized Loans depending on certain factors, including the current year in college.

For a graduate student:

Up to $8,000 each year in Perkins Loans depending on your financial need.

Up to $20,500 each year in Direct Unsubsidized Loans.

The balance college costs not covered by other financial aid is offered through Direct PLUS Loans, however a credit check is required for a PLUS loan.

For a parent of a dependent undergraduate student:

The balance college costs not covered by other financial aid is offered through Direct PLUS Loans, however a credit check is required for a parent loan (called a PLUS loan). 


FedLoan Phone Number:

Toll-Free 1-800-699-2908 Monday through Friday 8:00 AM to 9:00 PM (ET).
TEACH Grant support: Monday through Friday 8:00 AM to 9:00 PM (ET).
TTY # Dial 711 Support for hearing and speech-impaired callers, Monday through Friday 8:00 AM to 9:00 PM (ET).

Fax Number: 717-720-1628 (For returning or verifying documentation, etc.)

Mailing Address:

For Payments:

Department of Education
FedLoan Servicing

P.O. Box 530210
Atlanta, GA 30353-0210

Direct Debit application forms:

FedLoan Servicing
P.O. Box 3661
Harrisburg, PA 17105-3661

Letters and correspondence

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

Credit Disputes

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

4 few students walking on the sunsetFEDLOAN SERVICING DEFERMENT:

A deferment permits an individual to temporarily postpone the monthly payments under certain circumstances, such as:

  • Enrollment in school
  • Monetary or temporary financial difficulty
  • Unemployment
  • Military deployment
  • Natural disaster


A deferment allows a borrower to temporarily postpone making federal student loan payments or to temporarily decrease the due amount. Postponing or reducing the payments may prove extremely helpful for avoiding default of payments.

During a deferment, a borrower is not required to make payments.  The benefits of deferment doesn’t end there, depending on the type of loan, the federal government may take over to pay the interest during a period of deferment. 

The government may pay the interest on Federal Perkins Loan, Direct Subsidized Loan and Subsidized Federal Stafford Loan.

The government does not pay the interest on unsubsidized loans (or on any PLUS loans). The borrower is entirely responsible for paying the interest that accrues during the deferment period. Non-payment of interest for the deferment period leads to the interest getting accumulated and added to the loan principal amount.

In most cases, deferments do not work automatically a borrower is required to submit a request to the loan servicer, the company that is in charge of the loan account. In case of Direct Loans and FFEL Program loans, the loan servicer is the one who needs to be contacted for a deferment and in case of Perkins Loans; the school attended while receiving the loan has to be contacted.


Forgiveness, cancellation, and discharge of the student loan means that the borrower is no longer expected to repay the loan. There are many circumstances under which a fedloan Student Loan can be discharged:

1. Total and Permanent Disability (TPD) Discharge

2. Death Discharge

3. Discharge in Bankruptcy

4. False Certification of Student Eligibility or Unauthorized Payment Discharge

5. Unpaid Refund Discharge

6. Teacher Loan Forgiveness

7. Public service Loan Forgiveness4 money-handcuffs on table

8. Perkins Loan Cancellation and Discharge is applicable to an individual who is a

  • Volunteer in the Peace Corps or ACTION program (including VISTA)
  • Teacher
  • Member of the U.S. armed forces (serving in area of hostilities)
  • Nurse or medical technician
  • Law enforcement or corrections officer
  • Head Start worker
  • Child or family services worker
  • Professional provider of early intervention services


Direct Consolidation Loan allows you to combine multiple federal education loans into one loan. The result is a single monthly payment instead of multiple payments.

Fedloan servicing Consolidation might prove to be the right option for individuals who

  • Have loans with multiple loan servicers
  • Have substantial student loan debt
  • Have more than one type of federal loan
  • Have loans with variable interest rates
  • Have difficulty paying the amount due on loans and need a lower payment

book keeping photoAdvantages of Consolidation:

  • Lower Monthly payments
  • Fixed Interest rates
  • Less confusion since payments are to be done to just one servicer.

Drawbacks of Consolidation:

  • Higher amount of monthly payments
  • Higher interest amount to pay
  • Loss of loan enticements
  • Risk of ineligibility for some military benefits


The interest rate differs depending on the loan type the first payout date of the loan. The table below provides interest rates for Direct Loans first disbursed on or after July 1, 2016.

Perkins Loans (regardless of the first disbursement date) have a fixed interest rate of 5%.

Interest Rates for Direct Loans First Disbursed on or After July 1, 2016

Direct Subsidized Loans Undergraduate 3.76%
Direct Unsubsidized Loans Undergraduate 3.76%
Direct Unsubsidized Loans Graduate or Professional 5.31%
Direct PLUS Loans Parents and Graduate or Professional Students 6.31%

The amount of interest that accumulates on the loan from month to month is calculated by a simple daily interest formula.

Simple daily interest formula:

Interest amount = Outstanding principal balance x number of days since last payment x interest rate factor

The interest rate factor is determined by dividing the loan’s interest rate by the number of days in the year.


The reviews on the net about Fedloan Servicing don’t seem to be attractive. Each and every person who has availed loan has a different experience to share. For a company managing such a huge portfolio of loans and handling them, there might be some hitches here and there.

Some have had issues regarding interest calculations, loan disbursements, repayments, repayment plans, deferments, consolidations and many more to club under. When it comes to services pertaining to monetary terms, there sure is the possibility for misconceptions, mistakenfinancial jargons and the like.

It is always wise to read and understand related documents thoroughly before acquiring any financial aid. Also the repayment capability has to be pre-determined and a loan has to be requested accordingly. Purchase only what you can pay for – this hold double correct for loans.

A Loan has to be repaid in full and perfectly not only to close the loan but also to stabilize one’s credit worthiness. The reports of repayments of these loans will be recorded and will be used while preparing credit reports of individuals and in the calculations of credit score, which is going to play a major role in the future financial life of a person.

Rather than asking “Is fedloan servicing legitimate or not?” one has to check their legitimacy and improve their ability to repay the loans at the right time. If a person is struck in an unfavorable situation, he has to put to use the options of deferment and forgiveness to the maximum good of his situation. For all this a sound knowledge about the Fedloan Loans and Servicing proves inevitable.

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