One of the federal government\u2019s largest student loan servicers just called it quits.<\/p>\n
The Pennsylvania Higher Education Assistance Agency, which is one of several companies paid by the Education Department to manage the government\u2019s $1.59 trillion portfolio of student loans, said on Thursday that it would no longer serve in that role after its contract ends later this year.<\/p>\n
The announcement comes less than three months before the federal government is expected to end the temporary pause on student loan payments and interest \u2014 on Sept. 30, at the earliest \u2014 which it put into place because of the pandemic. P.H.E.A.A., also known as FedLoan, services the accounts of 8.5 million borrowers, including those in the Public Service Loan Forgiveness program.<\/p>\n
The contract for P.H.E.A.A., which has been frequently criticized for poor service, expires on Dec. 14. The agency said in a statement that it notified the Education Department on Thursday that it would \u201cnot accept an extension of its 12-year-old federal student loan servicing contract beyond what is needed to ensure a smooth transition for borrowers.\u201d<\/p>\n
P.H.E.A.A., a quasi-state agency, added that it planned to focus on its \u201ccore public service mission in Pennsylvania,\u201d which includes helping students there pay for college. The agency said it entered the contract with the Education Department in 2009 to support that mission, but that the federal programs \u201chave grown increasingly complex and challenging while the cost to service those programs increased dramatically.\u201d<\/p>\n
The agency\u2019s original loan-servicing contract expired in June 2019, but it had continued working with the department through a series of extensions.<\/p>\n
The decision was first reported by Penn Live.<\/p>\n