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FedLoan will cancel Education Dept. contract, affecting 8.5M student loan borrowers

By: - July 9, 2021 4:17 pm
FedLoan will no longer manage student loans for Education Dept.

LSU students line up for the COVID-19 vaccine at a mass vaccination event at Tiger Stadium (JC Canicosa / Louisiana Illuminator)

FedLoan Servicing, which manages the U.S. Department of Education’s student loan repayment programs, announced Thursday it will not renew its contract set to expire on Dec. 14. 

Also known by its official corporate name, Pennsylvania Higher Education Assistance Agency (PHEAA), the company manages loan repayments for roughly 8.5 million or 20% of all federal student loan borrowers across the nation and is the only contractor that administers the federal government’s loan forgiveness program.

In a news release, the company said it will not accept an extension of its 12-year-old contract “beyond what is needed to ensure a smooth transition for borrowers.”

“In the 12 years since PHEAA accepted the terms of its federal servicing contract, the federal loan programs, as managed by the U.S. Department of Education, have grown increasingly complex and challenging while the cost to service those programs increased dramatically,” the company said.

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Wesley Muller
Wesley Muller

Wes Muller traces his journalism roots back to 1997 when, at age 13, he built and launched a hyper-local news website for his New Orleans neighborhood. In the years since then, he has freelanced for the Times-Picayune in New Orleans and worked on staff at the Sun Herald in Biloxi, WAFB-9News CBS in Baton Rouge, and the Enterprise-Journal in McComb, Mississippi. He also taught English as an adjunct instructor at Baton Rouge Community College. Much of his journalism has involved reporting on First Amendment issues and coverage of municipal and state government. He has received recognitions including McClatchy's National President's Award, the Associated Press Freedom of Information Award, and the Daniel M. Phillips Freedom of Information Award from the Mississippi Press Association, among others. Muller is a New Orleans native, a Jesuit High School alumnus, a University of New Orleans alumnus and a veteran U.S. Army paratrooper. He lives in Ponchatoula, Louisiana, with his two sons and his wife, who is also a journalist.