EdFinancial Review – How Does It Work, Pros & Cons

EdFinancial is a Loan servicing company for Federal Loans.

They have been operating for over 25 years now, and they work hand in hand with the Department of Education to manage and monitor student loan payments. The services they offer are usually free of charge.

If this sounds a bit confusing, do not worry, we shall explain what it all means, and why you need to know more about this company.

When the government issues out federal student loans, it is difficult for them to handle the management and follow-up process necessary to ensure that everyone pays back what they have been given. They, therefore, outsource the management of the loans to a third party company.

This is where companies such as EdFinancial and My FedLoan, among others come in.

They do all the work for the Federal government, which includes; following up on students, receiving loan repayments, and updating this information on the student’s accounts.

In this review, we take a look at the operational efficiencies of EdFinancial, and most especially, the problems that students encounter with the company.

What Does EdFinancial Do?

EdFinancial is responsible for the management of some federal loans. They are appointed by the government to perform the following tasks;

  • Take and remit payments from the students to the government.
  • Deal with all student-related loan issues.
  • Make changes to the repayment terms when the students ask for them.
  • Make resolutions about the loans.
  • Assist with the postponement of payments or loan deferment.
  • Approve students for loan forgiveness.

As a student, you do not have control of the loan servicing company you shall be given to handle your loan. The government appoints them randomly. There are very many companies with this contract, so you never know who will receive your loan.

Limitations of Ed Financial Services

This company processes numerous student loans, and one of their biggest challenges are customer service. According to the Better Business Bureau, the most common student problems with this company are;

Poor Customer Services

Being one of the largest loan servicing companies in the US, they receive very many calls and emails from students, and as such, they find it quite challenging to ensure that everyone is happy and well served.

As a customer, you will always want to have all your questions answered on time, and your loan well-updated whenever you send in the payments.

This is not always the case. There are over 22 reported cases on the Better Business Bureau that have to deal with Customer service, and on Yelp the company has only one star.

Most people have complained about Customer service and the fact that they are never connected to the right department on time.

Most other issues remain unresolved as well.

There is also a delay in processing requests such as change of the repayment plan. In fact, a quick review showed that most of the loans under EdFinancial management have problems that have not been resolved yet.

What Can You Do As A Student?

As much as this isn’t how the company is supposed to conduct itself, it is the reality, and since they haven’t changed things yet, you need to find ways of receiving help, even if it is quite irritating.

When you realize that your loan has a problem, find out whether or not you can sort this problem out online. Create an account with the company and check on their problems corner if the problem you have has been listed.

Next, call them as many times as possible. Avoid calling during the rush/busy hours, e.g. in the mornings, when everyone else is also trying to reach them. Target off-peak hours such as after work and lunchtime. There is less congestion in the system at these times.

If calling totally does not work, visit their offices physically, and do not leave until they have sorted out your problem. Do not go there in a hurry, so you can manage to just sit and wait. The reason why you should be aggressive in this is that any loan-related mistakes could end up costing you more than you thought.

Loan Transfers

There are times when a student will be switched from one loan servicing company to another. This is common and it happens all the time.

The company that was handling your loan is then supposed to send all of your loan documents to the new company for them to continue with their management.

According to the numerous complaints lodged on the Consumer Protection bureau site, this is rarely ever done.

It, therefore, means that you could be repaying your loans, but they are not getting updated since your file could be in transit or in the wrong place.

Again, when writing such things  – you have mention sources – Done and corrected

Remember that these companies are also required to report on your repayment to the credit bureaus, who then use this information to update your report. If the credit bureaus do not receive the right information, then you may end up losing points on your score and having negative entries on your report. It is a serious problem.

What Can You Do?

Now, this is where you need to be aggressive.

When you learn that your loan servicing company is changing, you should and MUST contact the new company immediately, in order to find out if they have already received your file or not.

Also, do not lose the contacts of the previous company, as you shall need them to follow up on whether or not they sent your information to the new firm.

Keep logging in to the new company’s website as often as you can, to check whether your details have been transferred and updated. If not, visit the original company and ensure that they have sent out your details, and after that, go to the new one to ensure they have received and updated as required.

Wrong Updates

This is simply the mother of all errors!

On the BBB website, there are numerous complaints from students who claim that there are times, – believe it or not, when you will pay your loan even in advance, or even increase the installment amount, and then find that the company has applied the payment to the wrong loans.

Or, the student could have been approved for forbearance, which is not stated on their loan status, and the company keeps charging them interest and expecting monthly payments even during the forbearance period since the systems are not updated.

This is very frustrating.

Many students have reported this issue with EdFinancial.

What Can You Do?

When it comes to your loan account, and these service companies, the trick is – MONITOR your account all the time.

Keep in contact with them as well, and if you happen to notice even the slightest of discrepancies, raise an alarm on the spot.

In addition, keep all correspondence with the company, even telephone conversations, as you may need this later on, in case a problem goes unresolved.

Excessive Phone Calls

One of the duties of a loan servicer is to collect on behalf of the federal government. In this regard, the company tends to act as debt collectors.

One of the most annoying qualities of debt collectors is harassment, and unfortunately, EdFinancial seems to do the same when trying to collect student loans.

Reports on the BBB website on collections show there are over 22 cases of harassment from the company concerning loan repayments. EdFinancial staff usually contacts them incessantly trying to collect on loans which can be frustrating and irritating.

What Can You Do?

It is good if you pick the first call, find out what is happening with your loan, and if you have defaulted, you should visit their offices in order to come up with a repayment plan.

You shouldn’t feel victimized or frustrated, because there are options available for students such as deferment and even loan forgiveness if you have repaid the loan for a specified period of time.

If you have already visited the company and come up with a solution and they still keep calling you all the time, then you must exercise your right as a consumer. Even as a defaulter, you have rights. No one should infringe on these rights.

You can call and ask them to stop harassing you or sue them for violating your rights.

You mentioned very important limitations and the ways a student can deal with them which is great!

Benefits of EdFinancial Services Company

In spite of the limitations, there are many benefits for students who would like to use EdFinancial’s service

Numerous loan payment modes

Once your federal loan has been assigned to EdFinancial, you can easily use one of their numerous repayment options to keep track of your monthly or weekly payments.

You can pay for your loan through the phone, online, and by mail.

Interest Rate Discount

When you sign up for the company’s automatic payment, you shall receive a 0.25% discount on your interest rate.

Automatic payment deducts the money from your personal account every month.

Paying Plans

EdFinancial has many repayment plans for borrowers.

You can choose whichever one best suits you and makes it easy for you to settle your loan payments.

You can choose from the income driver plan, the income-contingent plan, or the Revised Pay as you Earn plan.

They are all designed to make it easy for you to repay your loan.

Loan Forgiveness

After 10 years of consistent repayment or 120 loan payments, the government can consider you for loan forgiveness on the remaining amount.

This is however only available for federal student loans only.

Forbearance And Deferment

EdFinancial has the responsibility of approving students for forbearance and deferment.

They usually look into your financials and other details before giving you this approval.

Conclusion

As a loan servicing company, EdFinancial is supposed to offer help when dealing with your loan, and you must never feel victimized or harassed by them. This is, however, a free company and it is also important to appreciate their efforts in dealing with numerous student loans.

The information above will help you deal with some of the most common problems with this company. These are problems that you can actually handle and avoid too much frustration.

Federal loans are great because they are given with low-interest rates, and in addition, they have the option of deferment, and if you have paid for a long time, and are completely unable to repay, the government has a loan forgiveness program as well, although it is not open to everyone.

The best advice would be to use our solutions above to try and deal with the company in an amicable way because the option of using a private lender is not always the best. Their interest rates are way too high, and they would never, ever forgive you.