The Pennsylvania Higher Education Assistance Agency said Thursday that it would not be extending its federal student loan servicing contract with the Department of Education once it expires in December. It agreed to continue working with the Office of Federal Student Aid until all its borrowers are transitioned to a different servicer.
PHEAA, which operates as FedLoan Servicing, currently manages loans for 8.5 million borrowers and services the Public Service Loan Forgiveness and Teacher Education Assistance for College and Higher Education Grant programs. Richard Cordray, chief operation officer of Federal Student Aid, said the office will work with PHEAA to develop a wind-down plan to facilitate a smooth transition for both borrowers and the programs.
“This plan will feature early and frequent communications and clear guidance on what borrowers should expect, as well as strong oversight from FSA during this transition,” Cordray said. “The U.S. Department of Education is committed to using all of the tools in our toolbox to make sure borrowers are supported and not negatively impacted during this transition.”