Sloan is the newest servicer of federal student loans. Unlike bigger servicers like Nelnet and MOHELA, Sloan will only handle one specific type of federal loans: commercial FFEL loans.
What does this mean for borrowers?
Dealing with a new servicer is always a headache, but by specializing in commercial PLUS loans, the hope is that servicer guidance will be more accurate.
Most importantly, if you have loans serviced by Sloan, the odds are pretty good that you are missing opportunities for lower monthly payments and earlier loan forgiveness. The key nugget of information is that commercial FFEL loans can usually be converted to borrower-friendly federal direct loans.
What are commercial FFEL loans, and why were they moved to Sloan Servicing?
The Federal Family Education Loan (FFEL) Program was created to help more Americans afford college. Students could borrow from a private lender, and the federal government guaranteed the loan would be repaid. In 2010, the government discontinued the program and stopped using banks and lenders as intermediaries between students and the federal government. Many of the loans created during this program are still commercially-held loans.
If you have loans with Sloan Servicing, you have commercial FFEL loans. In other words, you owe money to a third-party lender, but the federal government continues to guarantee the debt.
The good news in this situation is that commercial FFEL loans are still federal loans. Borrowers may have to jump through some hoops, but it is possible to transfer the debt away from Sloan Servicing and qualify for repayment plans like SAVE and forgiveness programs like Public Service Loan Forgiveness.
Enrolling Sloan Servicing Loans in SAVE and Public Service Loan Forgiveness (PSLF)
The problem with Sloan Servicing Loans is that they are commercial FFEL loans, and these loans are not eligible for PSLF or SAVE.
However, borrowers can consolidate the debt into a federal direct consolidation loan to gain eligibility. The consolidation process repays the commercial loan in full and creates a new loan funded by the federal government. For most FFEL borrowers this means eligibility for SAVE and PSLF.
Additionally, borrowers who consolidate before June 30, 2024, can maximize their credit from previous payment activity. In the past, consolidated restarted progress toward loan forgiveness. Right now, it can potentially speed up the forgiveness clock.
Exceptions for Parent PLUS and Spousal Consolidation Loans. Within the already complicated world of commercial FFEL loans, some loans are extra complicated.
If you have Parent PLUS loans, you can still consolidate to gain eligibility for PSLF, but you won’t be eligible for SAVE unless you use the double-consolidation loophole.
Spousal consolidation borrowers will need to wait for new regulations to be implemented before they can take any action on their loans.
Consolidation Tips for Commercially-Held Loans
Most borrowers will find that consolidating their commercially-held FFEL loans is the best approach.
Opting for a federal direct loan means fewer strings attached and more repayment and forgiveness opportunities. The one-time IDR count update also removes much of the guesswork for people who consolidate before June 30, 2024.
Consolidating their loans gives borrowers the unique opportunity to choose their loan servicer. Generally speaking, there is no loan servicer with a great reputation, and all loan servicers must follow the same rules, so there is no strategic advantage to choosing one over the other.
That said, at the time of this article, MOHELA hold times appear to be consistently longer than most other servicers, so choosing anyone else is recommended. Sadly, MOHELA is unavoidable for those pursuing PSLF. If you plan on pursuing PSLF, you should pick MOHELA, as they handle all PSLF borrowers.
When to Stick with Sloan Servicing
If most borrowers should consolidate their commercial FFEL loans right now, what is the exception to the rule?
The narrow exception right now is for people who have a premium interest rate on their loans. When some commercial lenders offered consolidation services, they also offered an interest rate discount to some borrowers. If your federal loan interest rate is extremely low, you may be receiving this discount. If you are unsure of whether or not you have a rate discount, call Sloan Servicing to ask.
The problem with consolidation for people with a rate discount is that the new direct consolidation loan will revert back to the statutory interest rate.
The interest rate change is an acceptable consequence for borrowers who desperately need SAVE or are pursuing PSLF. However, if you are likely to repay your loan in full without needing SAVE or PSLF, it could be preferable to stick with Sloan Servicing.
The ideal approach will depend on your other debts, loan balance, and financial situation.
Contacting Sloan Servicing
If you need to reach Sloan, their phone number is 833-597-5626.
Crucially, Sloan also offers borrowers the chance to contact them via email. When possible, communicating with lenders via email is ideal. The email form is available here.
Just found out about the SAVE program when I finally got so frustrated with Sloan Servicing that I asked if I could just go to another loan servicer. We were transferred from Nelnet to Sloan with no notice. Nelnet refuses to help as we had already been transferred. We’ve been trying to work with Sloan Servicing for several months, but continued to be told that we owed hundreds of dollars and they would be sending us to collections. All of this we found out when we received a late payment notice. We were in the middle of a $0 repayment plan with Nelnet. We applied to get our loan consolidated using SAVE, but we have missed the deadline. Is there anything we can do?
That sounds like a really frustrating situation Michelle.
The deadline to consolidate to get the most favorable terms was July 1. However, because of the ongoing lawsuits attempting to block SAVE, some borrowers were not able to sign up by the deadline. I’m hopeful that the Department of Education gives some flexiblity to the borrowers who didn’t quite make the deadline.
What is the corporate email address for Sloan Servicing? I can’t connect with them! Their site states to get email address click, but there is nothing to click on. I am soooo sick of this company!
In my experience, most of the serivcers make it difficult to just send them an email with quesitons. The Contact page offers a mailing address if you want to stick with written correspondence as well as a phone number to call them directly.
As frustrating as it is, sometimes a phone call is unavoidable.
I am in the process of applying for a total disability forgiveness.
My student loan is or was with Sloan Services.
I put my disability application in about a month ago.
Sloan said they needed another documentation than that which I sent them.
I sent the requested information in. They said they did not receive it?
I sent the info in again.
They received it.
I received a letter from a collection agency named Allied Interstate.
They have my entire loan now.
I am 71 years old and been disabled for 12 years.
I need my loan forgiveness.
Why did they send my student loan to a collection agency after I applied for Permanent Disability Forgiveness, which I am qualified to receive?
What is going on?
I feel like i have been scammed?
I’ve got a few thoughts based on what you have said Jan.
First, I think it would be reasonable for you to ask for a deferment or a forebearance while your disability discharge application is pending. If granted, that would pause any collections activity.
Second, I find it a bit strange that you are not working with NelNet on the applicaiton. They are the servicer in charge of the applications. You can read more about the process here: https://studentaid.gov/manage-loans/forgiveness-cancellation/disability-discharge
Finally, I’d encourage you to consider consolidating your loans before the end of this month (as described in this article). You may have to restart the disability discharge process, but it would resolve any default on your loan, and help you qualify for the one-time payment count adjustment as well as more affordable repayment plans like SAVE. This would make getting your debt forgiven considerably easier and more affordable if you are unable to secure a disability discharge.