The company, citing its goal to “focus on its core public service mission in Pennsylvania,” will ensure a smooth transition for borrowers it works with on student loan servicing.
The Pennsylvania Higher Education Assistance Agency (PHEAA) announced it will not continue its federal student loan servicing contract with the U.S. Department of Education after it expires Dec. 14, 2021.
PHEAA, a federal student loan servicer since 2009, issued a statement that it will “ensure a smooth transition for borrowers.” The decision is “in an effort to more appropriately focus on its core public service mission in Pennsylvania,” according to the statement, which continues:
“As a state agency with a mandated public service mission, PHEAA occupies a unique position among the nation’s large student loan servicers. In the 12 years since PHEAA accepted the terms of its federal servicing contract, the federal loan programs, as managed by the U.S. Department of Education, have grown increasingly complex and challenging while the cost to service those programs increased dramatically. PHEAA will continue to expand its successful commercial servicing, mission-based student lending and software as a service business as it refocuses on its core mission for the Commonwealth of Pennsylvania.”
PHEAA was created in 1963 by the Pennsylvania General Assembly with the primary mission of creating affordable access to higher education for Pennsylvania students and their families, according to its statement.
When PHEAA became a federal servicer in 2009, “it sought to diversify its business operations following the financial crisis and the end of (the Federal Family Education Loan Program) to help support its public service mission – most importantly the funding of need-based grant awards for Pennsylvania students.”
According to a report from Inside Higher Ed, Richard Cordray, the chief operation officer of Federal Student Aid, said the office will work with PHEAA on the transition process and a “wind-down plan.”
“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 in the article. “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.”