FedLoan To Transfer Student Loans In 2022: What To Expect

If your federal student loans are administered by FedLoan Servicing, a big change is coming your way. FedLoan Servicing has ended its contract with the U.S. Department of Education, and all current FedLoan borrowers will be transferred to new student loan servicers by the end of 2022.

You’ll likely receive communications from the Department of Education, FedLoan and your new loan servicer, if you haven’t already, explaining the update. None of the terms of your loans will change, but you will have to make payments to a new company—and it’s crucial to do so as soon as you’re required to. That way, you won’t miss a payment or fall behind.

Keep in mind, though, that the coronavirus payment pause is still in effect until Aug. 31, 2022. You’re not required to make payments until then, even if your servicer changes. Here’s what to expect.

What Is Changing with FedLoan Servicing?

Companies that manage federal student loan repayment on behalf of the government enter into contracts with the Department of Education. Sometimes, those contracts end or the government reassigns borrowers to different servicers based on the programs the borrowers have signed up for.

When that happens, the government transfers your loans to a new servicer. You may have already experienced a servicer transfer as a student loan borrower; most of the time, everything goes smoothly. In this case, since FedLoan will no longer oversee federal student loans, borrowers will be switched to one of the following servicers: MOHELA, Aidvantage, Edfinancial or Nelnet. All transfers should be complete by December 2022, according to FedLoan.

How Will PSLF and TEACH Borrowers Be Affected?

FedLoan Servicing was previously the exclusive servicer of loans repaid under the Public Service Loan Forgiveness program and grants received under the Teacher Education Assistance for College and Higher Education (TEACH) Grant program.

The Department of Education has announced that MOHELA will be the new point of contact for participants in these programs. The switch from FedLoan to MOHELA will likely happen for you later in 2022, according to the department, but you can check your loan or grant’s transfer status on MOHELA’s website. No other changes will take place regarding your loans or grants.

MOHELA also says that if you previously used autopay to make payments to FedLoan, your information will automatically transfer and you won’t have to re-enroll in autopay with MOHELA.

What Happens When Your Loan Is Transferred

You’ll likely receive an initial email, letter or both announcing the transfer, with your new servicer’s contact info, about 15 days before the transfer begins. You’ll then get an update from the new servicer that the transfer has been finalized, usually about 10 days after its effective date. The servicer will let you know from what date you should begin making payments to the company.

Your loan details will likely be available on the new servicer’s website about two or three days after you’ve received an update that the transfer is complete. Payments or applications that were in process before the transition should transfer seamlessly to your new servicer. But it’s a good idea to double-check that everything is up to date on your new account when it’s ready.

If your loan is transferred before Aug. 31, 2022, you’ll continue to benefit from the coronavirus forbearance and 0% interest rate until they expire. But when it’s time to make payments again, you’ll make them to your new servicer.

How to Ensure a Smooth Transition

Take these steps to set yourself up for a successful transition away from FedLoan:

  • Make sure FedLoan has your updated email and postal address on file so that it can contact you about the transfer.
  • Check your inbox and mailbox regularly, including your spam folder, so you don’t miss a message.
  • Once you’ve received the initial communication about a transfer, you’ll likely already be able to set up an online account with the new servicer.
  • When setting up your account, make sure the new company has your current contact information and check where your loans stand in the transfer process.
  • If you use an automatic bill pay service through your bank to make payments, provide your bank or bill pay administrator with your new servicer’s name and address and your new account number. Make sure to do so as soon as you’ve gotten confirmation that the transfer is complete.
  • If your loans are part of a special program like PSLF, double-check after the transfer that all of your data and your loan status has been transmitted correctly.
  • If you notice an issue after your loan details become available on your new servicer’s website, contact them right away, and have your accurate loan information ready if they have any questions.

How to Reach FedLoan Customer Service

If you’d like to get in touch with FedLoan in advance of or during the transfer, here’s how:

  • Call 1-800-699-2908 Monday through Friday between 8:00 a.m. and 9:00 p.m. ET
  • Send an email while signed in to your account

More from Forbes Advisor