Who is PHEAA?
The Pennsylvania Higher Education Assistance Agency (PHEAA) is a quasi-state agency in Pennsylvania that services student loans. PHEAA conducts its student loan servicing activities under the names FedLoan Servicing and American Education Services (AES).
- FedLoan Servicing services federal loans made under the U.S. Department of Education’s Direct Loan program. It also services loans that were made by private lenders under the Federal Family Education Loan (FFEL) program that are owned by the U.S. Department of Education. While most FFEL program loans are owned by private lenders, some are owned by the U.S. Department of Education.
- FedLoan Servicing also has exclusive contracts to administer the federal Public Service Loan Forgiveness (PSLF) and Teacher Education Assistance for College and Higher Education (TEACH) Grant programs.
- AES services federal loans made under the Federal Family Education Loan (FFEL) that are owned by private lenders. It also services non-federal private student loans.
What is this settlement about?
The Attorney General’s Office filed a lawsuit against PHEAA in August 2017 alleging that it violated consumer protection laws relating to in adminstering the Public Service Loan Forgiveness (PSLF) and TEACH Grant programs and in handling Income-Driven Repayment (IDR) plan applications. A copy of the lawsuit is attached here. In particular, the lawsuit alleges that:
- PHEAA made account errors and provided borrowers with misinformation about eligibility requirements for PSLF that caused borrowers to lose months of qualifying payments toward loan forgiveness.
- PHEAA failed to timely process borrowers’ IDR plan applications, causing borrowers to lose months towards loan forgiveness.
- PHEAA erroneously caused TEACH Grant recipients to lose their grants and have them converted into loans that the recipients were required to repay.
The settlement provides an opportunity for borrowers who believe they may have been affected by these practices to obtain a detailed account review by submitting a claim form. If the account review identifies errors or misrepresentations, the borrower will receive account corrections and in some cases, monetary relief. A copy of the settlement will be posted here when available.
- For borrowers who are pursuing PSLF, the account review will determine whether PHEAA made errors that resulted in an inaccurate count of the number of qualifying payments that the borrower made towards loan forgiveness. The review will also determine whether PHEAA made misrepresentations to the borrower concerning which repayment plans, loan statuses, or employers qualify for PSLF.
- For borrowers who applied for an IDR plan, the review will determine whether PHEAA delayed longer than 30 days in processing the borrower’s IDR application, causing the borrower to miss the opportunity to make a qualifying payment towards loan forgiveness.
- For borrowers whose TEACH Grants PHEAA erroneously converted to loans, and who unsuccessfully applied for reconsideration with the U.S. Department of Education (or who apply for reconsideration within two years of the settlement and are denied), PHEAA will automatically refund any payments the borrower made on the converted TEACH Grant and pay off any remaining balance.
Who is eligible to submit a settlement claim?
Borrowers are eligible to submit a claim if they
- resided in Massachusetts at any time after January 1, 2013 and
- continue to have federal loans that are serviced by FedLoan Servicing.
Eligible Loan Type
Not Eligible Loan Type
If your federal loans are serviced by AES, you are not eligible to submit a claim under the settlement.
Borrowers who went to school in Massachusetts but moved away by the time their loans entered repayment are not eligible to submit a claim. Borrowers whose federal loans are no longer serviced by PHEAA are also ineligible.
What types of resources exist for non-Massachusetts residents and other ineligible borrowers?
Borrowers who are not eligible to submit a claim under the Massachusetts AG's Settlement may wish to contact the Federal Student Aid Ombudsman, Consumer Financial Protection Bureau, and/or their home state attorney general’s office if they believe they have been subject to account errors or misrepresentation by PHEAA. Certain states also have state-level student loan advocates or ombudspersons. A list of these advocates and ombudspersons is available on the National Consumer Law Foundation’s website.
What types of relief can borrowers receive under the settlement?
There are several types of borrowers who may receive relief under the settlement.
- Public Service Loan Forgiveness (PSLF Borrowers)
Borrowers who are pursuing PSLF may receive corrections to their PSLF qualifying payment count if the account review process finds that PHEAA made a data entry or counting error. If the review process finds that PHEAA misrepresented or failed to properly advise the borrower as to which types of repayment plans, repayment statuses, or employers qualify for PSLF and the borrower attests that they relied on that misinformation but were in compliance with all other PSLF requirements, the borrower will receive a correction to their PSLF qualifying payment count. If a correction is not possible, the borrower will receive monetary compensation instead. To be considered for this PSLF relief, borrowers must submit a claim form.
- Income-Driven Repayment (IDR) Borrowers
Borrowers who experienced an IDR application processing delay of more than 30 days and who consequently missed an opportunity to make a qualifying payment towards loan forgiveness under an IDR plan will receive corrections to their IDR qualifying payment count. In order to be considered for this IDR relief, borrowers must submit a claim form.
- TEACH Grant Recipients
TEACH Grant recipients whose grants PHEAA erroneously converted into loans and who unsuccessfully applied for reconsideration with the U.S. Department of Education (or who apply for reconsideration within two years of the settlement and are denied) will have the remaining balance of the converted grant paid off by PHEAA. PHEAA will also refund any of the borrower’s payments.
TEACH Grant recipients must apply to the U.S. Department of Education for reconsideration of their TEACH Grant conversion if they have not already done so. However, they do not have to submit an additional claim to receive TEACH Grant relief under the settlement.
When and how will I receive my settlement claim form?
PHEAA will send settlement claim forms to borrowers on a rolling basis between March 2021 and July 2021. Borrowers who have elected to receive electronic communications from PHEAA will receive the claim form electronically. All other borrowers will receive the claim form by mail.
How can I return my settlement claim form?
The claim form and its accompanying notice will explain how to return the claim form to PHEAA. Borrowers will have the option to return the form electronically through their online account or by mail.
How long do I have to return my settlement claim form?
Borrowers have 90 days from the date of its receipt to return their claim forms, but are encouraged to return them promptly to get the account review underway.
How should I fill out my settlement claim form and what additional information should I include?
The claim form allows borrowers to check boxes to indicate which types of problems they experienced with PHEAA. If applicable, borrowers should check multiple boxes. Checking any of the boxes, even if you are unsure which one applies, will allow you to submit your claim and secure an account review.
Borrowers may include supporting documentation or information with their claim form to assist PHEAA in its review, but are not required to do so in order to submit a claim and secure an account review.
When will I hear back from PHEAA about my account review?
Within 90 days of receiving the borrower’s claim form, PHEAA is required to complete its account review and notify the borrower of the outcome. In the course of its review, PHEAA may contact the borrower for further details concerning the borrower’s claim. Borrowers will be asked to designate their preferred method of contact for any follow up communications on their claim form.
What if I disagree with the outcome of my account review?
Borrowers who disagree with the outcome of PHEAA’s review will have an opportunity to dispute the outcome. Borrowers should submit their dispute within 30 days of receiving their account review outcome, and will be provided with a form to do so at the time they are notified of the outcome. As part of the dispute, borrowers will be asked to provide additional supporting information or evidence. Borrowers are strongly encouraged to dispute any outcome they believe is inaccurate.
What steps can I take now to ensure the best possible result under the settlement?
Make sure your contact information is up to date with your PHEAA and that you know whether you’ve elected to receive paperless communications. If you elected paperless communications, you will receive your claim form electronically and will need to log in to your online account with PHEAA to retrieve it.
Public Service Loan Forgiveness (PSLF) Borrowers:
In preparation for their claim and account review, borrowers who are pursuing PSLF may wish to submit an updated Employment Certification Form (ECF) in the coming weeks to ensure that their qualifying payment count is as up-to-date as possible. Borrowers should also review the PSLF qualifying payment count in their monthly billing statement to determine whether it seems accurate. Monthly billing statements identify a borrower’s PSLF qualifying payment count based on the time period covered by the borrower’s approved ECF forms.
Borrowers who are unsure whether they qualify for PSLF or who have never submitted an ECF should use the U.S. Department of Education’s Public Service Loan Forgiveness Help Tool to learn more about the program’s requirements and how to submit an ECF. For additional information about PSLF, borrowers can also visit the U.S. Department of Education’s PSLF webpage.
TEACH Grant Recipients:
TEACH Grant recipients should promptly apply to the U.S. Department of Education for reconsideration of their TEACH Grant conversion if they have not already done so. To receive relief under the settlement, TEACH Grant recipients whose grants PHEAA erroneously converted into loans must first be denied through the U.S. Department of Education’s reconsideration process.
Where can I learn more about Public Service Loan Forgiveness and its requirements?
The PSLF program has many detailed requirements.
Borrowers must make 120 on-time loan payments under either an income-driven plan or the 10-year standard plan, while working full-time for the government or a qualifying non-profit organization. These monthly payments must be made within 15 days of the scheduled due date and for the exact amount shown on the bill.
Only Direct Loans are eligible for PSLF. Borrowers with other types of federal loans, including FFELP or Perkins loans, can consolidate their loans into a Direct Loan, though any payments made before the consolidation will not count towards PSLF.
For all the PSLF program’s requirements, please visit the U.S. Department of Education’s PSLF webpage.
The American Federation of Teachers also has a website that is helpful in explaining the program’s requirements.
Are there other types of loan forgiveness programs for public servants?
Teacher Loan Forgiveness from the U.S. Department of Education
Federal loan borrowers who teach full-time for five complete and consecutive academic years in low-income schools or educational service agencies, and meet other qualifications, may be eligible for forgiveness of up to $17,500. Please visit this webpage to learn more.
Loan Repayment Program for Health Professionals from the Commonwealth of Massachusetts
Massachusetts health professionals may be eligible for the Massachusetts Loan Repayment Program if they agree to work under a two-year contract in an underserved community. Award amounts vary by profession, but may be as large as $50,000. Visit this webpage to learn more about the program and view a list of eligible professions.
Where can I learn more about Income-Driven Repayment (IDR) Plans?
If you are struggling to afford your federal student loans, you may wish to consider applying for an IDR plan. Under IDR plans, payments can be as low as $0 per month. Monthly payment amounts are based on family size and income. IDR plans also offer interest subsidies and the possibility of loan forgiveness after 20 or 25 years of qualifying payments. To learn more about these plans, please visit the U.S. Department of Education’s webpage on Income-Driven Repayment Plans.
Whom should I call if I have additional questions?
Borrowers with questions about the settlement may contact PHEAA at 1-800-699-2908 or the Attorney General’s Office at 617-963-2170.