FedLoan Servicing: The Quasi-Government Agency that Doesn’t Give a Damn About You
FedLoan Servicing, otherwise known as the Pennsylvania Higher Education Assistance Agency, is a non-government entity that manages repayment for Federal student loans.
If you’re still in school, you may not know the name. If you’re already paying your loans back, you’ve probably endured some of their reckless, infuriating incompetence.
I’ve written before about some of the dumb, illogical problems you’ll face when you start repayment, such as random swings in your monthly payment amount. They have also been accused of defrauding borrowers who are counting on the loan forgiveness program.
When you’re a student, it’s easy to overlook the ramifications of taking on a large amount of student debt. It only becomes real when Fedloan Servicing comes knocking, demanding a 4, 5, or 6-hundred dollar monthly payment. That’s when it started being real for me at least.
Student loans are carried by some 46 million Americans. Of those, about 10 percent are in default status. 10 percent. That is an astronomical number. The only reason this hasn’t led to a depression like the housing crisis is that Federal student loans aren’t packaged into CDOs and sold as financial instruments, otherwise the whole house of cards would have come crashing down some years ago.
While it’s true that a lot of the rules that govern how FedLoan Servicing operates originate from the Dept. of Education, they don’t get any extra points for effort. For example, unless you specify which loans to pay off, they will direct your funds toward the loan with the lowest interest rate, only applying the minimum amount toward loans with higher interest rates — basically paying off your loans in the least logical fashion.
They have also faced a good amount of legal action from borrowers who complain of slow processing times for requests, confusing regulations, and arbitrary denials for income-based repayment.
For the first couple of years you’re dealing with repayment of your loans, you will be infuriated with FedLoan Servicing’s vacuous incompetance. But then your rage will give way to a wisdom that only dealing with stupid people can bring you. You will make it your mission to pay close attention to your loan amounts, the interest rates, and the rules that apply to your loans.
Remember that the Pennsylvania Higher Education Assistance Agency is not a government agency. It is a private organization. Ipso facto they are not beholden to any constituency, and they will not treat you with any dignity as a customer / borrower. Now you know.
