PHEAA Settlement FAQs

1. What is PHEAA? Is it the same as FedLoan?

2. What is the agreement about?

3. What is Public Service Loan Forgiveness ("PSLF")?

4. What is an Income Driven Repayment ("IDR") plan?

5. Who does this agreement help?

6. Do I have to do anything to receive help?

7. How will I hear from PHEAA?

8. When will PHEAA be reviewing accounts? When will I hear about my account review? Are there deadlines I need to watch out for?

9. What will happen if PHEAA discovers an error in my account?

10. What if I disagree with PHEAA's account review?

11. What steps can I take now to ensure the best possible result for my student loans?

12. PHEAA used to be my loan servicer, but my account was transferred to a new servicer, do I still qualify for review?

13. What is the PSLF Limited Waiver Opportunity?

14. How does agreement work with the PSLF Limited Waiver Opportunity?

15. Will it cost me anything to go through this process?

16. Who should I call if I have additional questions?

    Pennsylvania Higher Education Assistance Agency (“PHEAA”) is one of the nation’s largest student loan servicers. It also operates as FedLoan Servicing (“FedLoan”) and American Education Services (“AES”).

This agreement resolves a lawsuit brought by New York Attorney General Letitia James against PHEAA. The lawsuit alleged that PHEAA failed to properly service student loans and administer the Public Service Loan Forgiveness (“PSLF”) program, including by failing to accurately count loan payments, improperly denying applications, and not processing applications in a timely manner. This agreement ensures that borrowers who believe PHEAA improperly administered their account or steered their loans into forbearance will have the opportunity to have their accounts reviewed for errors. You can find a copy of the complaint in the action at the PHEAA Complaint with File , and a copy of the PHEAA Settlement Agreement.

PSLF is a program created by the federal government in 2007 to encourage graduates to work in public service by offering loan forgiveness to borrowers who complete a period of public service while making qualified payments on their student loans. Under the program, borrowers who work for the government or a non-profit 501(c)(3) organization for ten years, and make 120 qualifying payments during that period, are eligible to have any remaining loan balance they have be forgiven entirely. The program should enable graduates to take lower-paying jobs in government and at nonprofits that serve veterans, the elderly, low-income children, people with diabetes, victims of domestic violence, and other vulnerable groups—ensuring that teachers, nurses, social workers, firefighters, and members of the armed forces all have an option to help them cancel out their student loan debt. To receive loan forgiveness through PSLF, borrowers need to comply with the requirements of the program, including certifying they work for a qualifying employer, and loan servicers like PHEAA are supposed to provide complete and accurate information to borrowers.

IDR plans allow student loan borrowers to lower their monthly payments to an amount that is based on a percentage of their income, though it also increases the number of years that borrowers must continue to make payments. IDR plans also require borrowers to work with their loan servicers to comply with the requirements of the program, including certifying their income.

PSLF and IDR are often used together by public servants, to lower their monthly payments, and then receive forgiveness after they have made 120 qualifying payments.

It helps current New York student loan borrowers who (i) submitted an employer certification or PSLF form seeking relief under the PSLF program (whether such relief was granted or denied), (ii) submitted an application seeking IDR (whether such relief was granted or denied) or (iii) were in discretionary forbearance at any time. All such borrowers who either currently have their student loans (Direct or FFEL loans) serviced by PHEAA or that had loans serviced by PHEAA as of December 1, 2021 are eligible.

If you believe PHEAA made an error related to your account, yes! Under the agreement, any current New York state resident who submitted an employer certification or PSLF form seeking PSLF relief, submitted an IDR application, or was placed in discretionary forbearance, and whose Direct or FFEL loan either is currently serviced by PHEAA or was serviced by PHEAA as of December 1, 2021 will have an opportunity to request that PHEAA review their account for any (or all) of the following:

  • Inaccurate information received from PHEAA about:
    • Eligibility for an Income Drive Repayment ("IDR") Plan;
    • Whether an employer or prospective employer qualifies for Public Service Loan Forgiveness (“PSLF”);
    • Whether a student loan qualifies for PSLF;
    • The right of a borrower to appeal or challenge a determination by PHEAA relating to PSLF or IDR;
    • The benefits of loan consolidation and/or the effects of consolidation on PSLF; and
    • The availability of, or eligibility for, a cancer deferment.
  • Erroneous denial of a PSLF and/or TEPSLF (“Temporary Expanded PSLF”) Application for Loan Forgiveness.
  • Erroneous denial of a PSLF Employer Certification Form.
  • Being erroneously placed into forbearance or deferment by PHEAA.
  • Incorrect calculation of a monthly loan payment by PHEAA.
  • Missed opportunities to make PSLF-qualifying payments or IDR payments due to a delay in PHEAA processing of an IDR request.
  • Failure to receive a detailed payment count concerning PSLF payments within 6 months of a request.
  • PHEAA will send out notices to borrowers to let them know they can request a review and explaining how to do so, so borrowers should be on the lookout for that notice. To be eligible, borrowers must complete the request for review and submit it back to PHEAA through the PHEAA borrower portal or by mail within 45 days of receipt. Finally, if borrowers who believe they are entitled to a review do not receive a notice from PHEAA explaining how to request a review, they may contact PHEAA directly via phone at 1-800-699-2908 (for FedLoan Services borrowers) or 1-800-233-0557 (for AES borrowers).

    In addition to the requested review, nearly 10,000 borrowers will automatically have their accounts reviewed for some or all of the above errors. These include borrowers who submitted complaints to our office concerning PHEAA, borrowers whose employment certification was denied on the basis of employer ineligibility and not subsequently approved, borrowers in discretionary forbearance for 30 or more consecutive months, borrowers who were not in repayment status for between 2 to 4 months for certain reasons, and borrowers whose deferment or forbearance requests were processed by certain third-party vendors between June 13, 2019 and August 1, 2019. For these borrowers, PHEAA is obligated to complete this automatic review on a rolling basis in the next 90 days, and to inform borrowers of the outcome of the automatic review within 10 days of completion. All borrowers in the automatic review population also are eligible to request a review, however – so if a borrower believes any of the above errors occurred, they should be on the lookout for the notice and complete the process described to request a review within 45 days of receipt.

PHEAA will use their traditional method of communication with each borrower. If you have generally received communications or letters in the mail, PHEAA will use the mail. If you have generally received communications with a different method, PHEAA will use that method.

PHEAA will begin reviewing the nearly 10,000 accounts eligible for automatic review shortly after the agreement became effective on April 27, 2022. All other eligible borrowers will receive notices on how to request a review between 30 and 90 days after that same effective date. These borrowers will be able to provide some information about the specific error(s) they believe occurred. Borrowers will need to return those forms within 45 days of receiving a notice. PHEAA will then have 90 days to complete its review.

After completing either an automatic review or requested review, PHEAA will reach out to individual borrowers to let them know about the results and to provide them with information about how to appeal the result, which must be done within 15 days of receiving the notice.

PHEAA will ensure the borrower gets credit for all their payments by adjusting accounts appropriately or, if this is not possible, PHEAA will make payments to compensate borrowers for the errors.

Borrowers can send in an appeal after receiving the results of their review, though it must be sent in within 15 days after receiving the notice. Furthermore, Attorney General James’ office will also receive regular reports on the review and appeals process to make sure it is working properly and will be able to intervene on borrowers’ behalf if they appeal PHEAA’s determination.

Make sure to monitor your mail or your email address or whatever method PHEAA traditionally used for contacting you.

If your loan was serviced by PHEAA as of December 1, 2021 and then was transferred to another servicer, you still qualify for review by PHEAA.

In 2021, PHEAA announced that it will stop servicing federal student loans by the end of its current contract and the Federal Department of Education is working on transferring those loans to new service providers. This transfer will not affect existing terms, conditions, repayment plans, or interest rates. PHEAA’s loans will be transferred to MOHELA, Aidvantage, Edfinancial, and Nelnet. MOHELA will be the servicer for all of PHEAA’s PSLF loans. The most up-to-date information on the transfer can be found at "FedLoan Servicing (PHEAA) to Stop Servicing Federal Student Loans".

Separately from the NYAG’s investigation, the U.S. Department of Education recently announced a limited waiver to the PSLF program that runs through October 31, 2022. Ordinarily, payments on Federal Family Education Loans (FFEL), Perkins, or other non-Direct federal loans did not qualify towards the required 120 loan payments required for loan forgiveness under the PSLF program. However, under the temporary waiver program, your payments on non-Direct loans (e.g., FFEL loans) may count towards the 10 years of loan payments required for loan forgiveness. The waiver program will also count certain payments on non-Direct loans that were late, for less than the full amount due, or made in the wrong payment plan.

Note that the NYAG’s review is separate from the Department of Education’s review—if you are potentially eligible for benefits or relief under the PSLF limited waiver opportunity, you will receive (or may have already received) separate correspondence about what, if anything, you need to do. If you have questions about the PSLF limited waiver opportunity, please visit the Office of Federal Student Aid’s website at PSLF Limited Waiver.

This Agreement expands on the benefits provided by the federal Department of Education’s PSLF waiver as you may be eligible for the waiver, or eligible for further relief under the waiver, if certain errors are found in your account.

No, PHEAA will handle all the costs of the review.

You can contact PHEAA directly via phone at 1-800-699-2908 (for FedLoan borrowers) or 1-800-233-0557 (for AES borrowers). If you have any difficulties reaching PHEAA, please contact Attorney General James’ office at 1-800-771-7755.