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FedLoan’s performance has been criticized, but its departure could be worse for student loan borrowers

admin by admin
July 19, 2021
in Loans
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FedLoan’s performance has been criticized, but its departure could be worse for student loan borrowers

Kristi Cruz could make her last college loan payment in February when the 49-year-old public-interest attorney qualifies for a federal program that will forgive her remaining $43,000 law school debt. Cruz’s journey for college-debt freedom has taken more than a decade.

But will it be yanked away at the last minute?

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FedLoan — which operates as a subsidiary of the Pennsylvania Higher Education Assistance Agency (PHEAA) — dropped a bombshell earlier this month, telling the federal Department of Education that it won’t seek an extension of a 12-year government contract to collect payments for millions of borrowers on a portfolio of federal education loans.

FedLoan, one of several government-approved contractors servicing 44 million education-loan borrowers, has been the target of lawsuits and audits over customer service. So its decision would seem to be a relief to reform advocates and borrowers.

 

Read more…

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