Hanna Renaldi's Blog: FedLoan Servicing: Tips for Working with Your Student Loan Servicer

FedLoan Servicing is a federal student loan servicer that’s part of the Pennsylvania Higher Education Assistance Agency (PHEAA), the largest servicer in the U.S. PHEAA is a financial aid organization that was established by the Pennsylvania General Assembly in 1963. PHEAA also runs American Education Services (AES), which manages private loans and those made under the Federal Family Education Loan Program (FFELP).

Since both FedLoan Servicing and AES have the same parent company, you might see them each referred to as “PHEAA,” or interchangeably. But it’s key to remember that if FedLoan Servicing manages your federal loans, that’s the company that you’ll make your loan payments to, that will help you enroll in repayment plans and that will answer questions about your loans. If AES manages your private or FFELP loans, they’ll provide those resources for you.

Quick facts

8 million: Number of borrowers served

$235 billion: Amount of loans in AES’ and FedLoan Servicing’s portfolios

(800) 699-2908: FedLoan Servicing’s phone number, staffed weekdays 8 a.m. to 9 p.m. Eastern time

How to make a payment

The Account Access section of FedLoan Servicing’s website allows you to make payments online, track your loan balances and sign up for direct debit, or make automatic monthly payments from your bank account. Create an account by entering your date of birth and account number or Social Security number, then save your bank information to the portal.

You can complete one-time payments before the due date each month by selecting “Make a Payment” once you’re logged in. Direct debit is an even easier method, and you’ll also get a 0.25% interest rate reduction on your loans when you enroll.

Register for direct debit by logging in to Account Access and clicking “Sign Up for Direct Debit.” You’ll be prompted to create an account PIN and to enter your bank details, including your account number and routing number. You’ll also have the opportunity to request that FedLoan Servicing deduct an additional amount beyond your scheduled payment each month.

By mail:

Send a check made out to “FedLoan Servicing” to:

Department of Education
FedLoan Servicing
P.O. Box 530210
Atlanta, GA 30353-0210

Include your 10-digit account number on your check, and be sure to send it in at least five to seven business days before your payment is due to make sure it’s processed on time.

By phone:

Call 800-699-2908 to make a payment over the phone. Have your account number and Social Security number handy.

How FedLoan Servicing applies payments to loans

Federal regulations require loan servicers to apply loan payments to late fees first, then to outstanding interest and, finally, to the principal balance, or the original amount of the loan disbursed. The one difference is for federal loans in repayment under an income-driven repayment plan; those payments are applied to interest first, then to late fees and, finally, to the principal balance.

It’s likely the majority of what you pay will go toward interest when you’re on an income-driven plan. Interest accrues quickly on these plans because you’re paying less per month over a longer period of time.

Also keep in mind that you’ll save money in the long run if you make a point to contribute more than your scheduled payment each month. The more you pay now, the larger the dent you’ll make in your principal balance.

Tips from FedLoan Servicing

Confirm your direct debit application has been processed before you stop making payments online, by mail or by phone. Otherwise, you might be penalized for a missed payment.

Email or mail instructions for how to apply extra payments as separate correspondence, instead of sending them in with a check.

How you can pay down loans faster

Your options for paying more than your scheduled monthly payment include:

Setting up direct debit for a higher amount than you owe each month; or
Making a separate payment at another point in the month, in addition to your monthly bill.

When you pay extra through direct debit, FedLoanServicing will apply that amount across all your loans. They’ll first apply your payment to interest accrued since your last payment, then to each of your principal balances according to the amount due for each one. Your account will be considered “paid ahead,” meaning the extra amount will automatically go toward next month’s payment on those loans. (Even if you’re paid ahead and your bill says you owe $0, FedLoan Servicing will still deduct the amount you’ve scheduled each month through direct debit.)

The way FedLoan Servicing automatically applies your extra payments might not help you pay down your loans fastest. Instead, you can target your payments to a specific loan — say, to the one with the highest interest rate. To do so, mail or email FedLoan Servicing instructions. The Consumer Financial Protection Bureau put together a sample letter you can use.

You can also target payments when you pay online. After choosing “Make a Payment” in the Account Access section of the site, click “Specify Loan Payment Amounts” and enter the additional amount you want to pay on each loan. You can provide standing instructions to the company if you want all your future extra funds applied in a specific way, say, to the highest-interest loan until it’s paid off.

If you decide to make an additional payment online, by mail or by phone, your scheduled direct debit payment will still be taken out of your bank account. Learn more in the “Targeting Payments” section of FedLoan Servicing’s website.

Whom to contact if you have questions

To contact FedLoan Servicing, you can:

Call: (800) 699-2908 weekdays between 8 a.m. and 9 p.m. Eastern time.

Email: Fill out an email form online.

Calling is your best bet if you have an urgent question about your loan payments and it’s during business hours. Stay in regular contact with FedLoan Servicing, especially if you’re having trouble making your payments or you’re interested in switching repayment plans. It’s their job to help you.

Brianna McGurran is a staff writer at NerdWallet, a personal finance website. Email: bmcgurran@nerdwallet.com. Twitter: @briannamcscribe.