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The Pennsylvania Higher Education Promotion Agency, which oversees loans to 8.5 million student borrowers, announced it will not renew its contract with the federal government when it expires later this year.
Consumer advocates welcomed the news because PHEAA, a quasi-government student aid organization created in 1963 by the Pennsylvania General Assembly, has been accused of providing inaccurate information to borrowers and making it difficult for borrowers to access assistance programs.
According to PHEAA, only about 5% of borrowers who applied for the national public service loan forgiveness program administered by PHEAA were approved. latest data…
The agency, known to borrowers as FedLoan, is one of several companies that the Department of Education pays to manage a $ 1.59 trillion public student loan portfolio.
“Student loan borrowers across the country, including millions of teachers and other government officials, have received the long-awaited news that the Ministry of Education will no longer rely on a company accused of widespread mismanagement and abuse to handle educational loans of millions of borrowers,” said Seth Frothman, executive director of the Center for the Protection of Student Borrowers, in a statement.
PHEAA’s contract with the government expires on December 14, 2021.
“In the 12 years since PHEAA accepted the terms of its federal service contract, federal loan programs administered by the US Department of Education have become increasingly complex and complex, while the cost of servicing those programs has skyrocketed,” he said. Keith New, PHEAA Representative.
If your federal student loans are currently serviced by PHEAA, you will be offered a new lender, ”the higher education expert said. Mark Kantrowitz…
You must make sure that the new service provider has all of your correct information.
Most federal student loan borrowers do not have to pay student loans until October thanks to the pandemic relief policy. But when you resume payments, you will want to keep transferring them to PHEAA until you find out about your new lender, experts say.
This is especially important for borrowers looking to get government service loan forgiveness as each payment brings them closer to the 120 payments needed to forgive their debt. Keeping track of your payments can also protect you.
“Borrowers must maintain a spreadsheet that lists the payment date, payment amount, repayment plan and related work for each payment,” Kantrowitz said. “If you have any problems, this table will help you solve them.”
If you don’t like your new service staff, you can switch to one by consolidating your federal loans. However, this could change the repayment schedule, he said. “So if you are seeking forgiveness for a government loan, I do not recommend doing so.”
Most federal student loan services operate in a similar manner, Kantrovitz said. “Changing staff can be like jumping from a frying pan into a fire, but without much improvement.”
However, borrowers who are having problems with their service agent should file a complaint with the Consumer Financial Protection Bureau.