Student loan management can be hard, especially when you have to use complicated websites like MyFedLoan. Understanding typical mistakes and how to avoid them will help borrowers keep their financial health and guarantee better paths of payback. This post looks at common mistakes in MyFedLoan administration and provides doable fixes.
1. Being Informed About the Federal Student Loan Servicer
Effective management depends on knowing who supports your federal student loans. Billing, handling payments, and helping with repayment plans fall to your loan servicer.
Learn who is responsible for servicing your federal student loans:
Go to the website for the Federal Student Aid (FSA):
- Go to studentaid.gov!
- See your dashboard with your FSA ID. See your designated servicer by going to the “My Loan Servicers” section.
Talk to the Federal Student Aid Information Center:
For help determining your loan servicer, call 1-800-433-3243. Especially considering the most recent modifications in loan servicing assignments, routinely checking your loan servicer guarantees you are properly directing payments and questions.
2. How to Avoid Confusion on Loan Forgiveness Programs
A lot of borrowers simply do not know about all the options for loan forgiveness or discharge that could apply to them. There are also specific-occupation programs — like those for teachers or public service employees — that can wipe out a significant amount of or even all student loan debt after a certain number of qualified payments.
Federal student-loan forgiveness for public service:
- Public Service Loan Forgiveness (PSLF):
- Intended for borrowers working in qualifying public service jobs.
- Must make 120 qualifying monthly payments under a qualifying repayment plan.
- Work for government organizations, non-profits, and other public service organizations counts.
If you want to be on track for PSLF, just make sure to submit the Employment Certification Form (ECF) each year and whenever you switch employers. This form confirms your employment and shows which payments qualify.
3. Neglecting Changes in Loan Servicing
A great deal has changed in the world of student loan servicing, from the departure of some servicers to the reassignment of loans. And there have been notable changes in servicers: FedLoan Servicing, which managed the MyFedLoan platform, ended its contract with the Department of Education in December 2022.
Navient federal student loan servicing ban impact:
- Legal action against Navient, a large loan servicer, resulted in the company leaving the federal student loan servicing business.
- Borrowers who were previously serviced by Navient were transitioned to different servicers.
Action Steps:
- Be vigilant for any communications from the Department of Education related to servicer changes.
- Make sure your contact information is updated to get timely notifications.
- Check your current loan servicer on the FSA website.
4. Neglecting Loan Repayment Alternatives
Not pursuing repayment options can be financially distressing. Income-driven repayment plans base monthly payments on your income and family size, so you may end up paying less.
Recommendations:
Talk to your loan servicer to go over repayment plans to fit your financial circumstances. If you have several loans, think about consolidating for easier management; however, note the consequences.
Misunderstandings with loan servicers can also lead to missed payments, which can put you in delinquency or default. Some borrowers were erroneously labeled as being delinquent even though they paid on time.
Preventative Measures:
- If ensuring it processes in time, set up automatic payments.
- Check your account statements regularly for accuracy.
- Keep a permanent record of every communication you’ve had with your loan servicer.
Ignoring Tax Deductions
Each year, the IRS allows student loan borrowers to deduct some of their loan interest. For 2022, the maximum you can deduct is $2,500. If you qualify to take this deduction, you get to keep more money in your pocket.
Action Steps:
Make sure you qualify for the student loan interest deduction.
Speak with a tax professional to ensure you take advantage of all deductions available to you.
FAQ’s
How do I find out who services my federal student loans?
Go to StudentAid and log in to your account. gov and select the “My Loan Servicers” tab. Or reach out to the Federal Student Aid Information Center by calling 1-800-433-3243.
What should I do if my loan servicer switches?
Change your contact information, keep an eye on communications from the Department of Education, and make sure to find your new servicer through the FSA website. Set up an account with the new servicer quickly.
How do I apply for Public Service Loan Forgiveness?
File the Employment Certification Form (ECF) both annually and whenever you change employers. You must then apply for forgiveness through your loan servicer after making 120 qualifying payments for work at a qualifying employer.
What do I do if I see discrepancies related to my loan account?
Keep a written record of every discrepancy, contact your loan servicer as soon as possible, and maintain a record of all communications. If those routes remain ineffective, you may consider filing a complaint with the Federal Student Aid Ombudsman Group.