The Pennsylvania Higher Education Assistance Agency (PHEAA) conducts its student loan servicing operations as FedLoan Servicing for federally-owned loans and as American Education Services (AES) for non-federal assets.
PHEAA felt it was important to create the FedLoan Servicing unit for servicing loans under its federal contract for three specific reasons: 1) Reduce borrower confusion, 2) Provide dedicated staff focused on servicing new direct loans, and 3) Provide clarity to schools.
Reduce Borrower Confusion:
As federally-mandated, all payments made on federal assets must be sent to a federally-approved lockbox vendor. That means that borrowers with commercial loans (non-federal assets) being serviced under the AES brand and federally-owned loans being serviced by FedLoan Servicing must send two separate payments to two separate addresses. By creating a clear distinction between commercial and federal servicing activity, borrowers will experience less confusion expecting AES to process both payments at a single address since it would be servicing both sets of loans. This confusion would have resulted in significant delays to payment posting.
PHEAA wanted to create a core group of staff who were specifically trained and focused on the unique aspects of the ECASLA "put" programs and the William D. Ford Direct Loan Program. PHEAA knew the movement of loans from one servicer to another would present issues for borrowers and wanted to have dedicated staff in place to handle these issues.
When you or your students receive a communication from FedLoan Servicing, you need to know with confidence that it is an official communication related to the servicing of federally-owned assets and not a marketing message of any kind for private loans or any other third-party product.