EdFinancial, also known as HESC, is a student loan servicer based in Knoxville, TN. Founded in 1987, the company originally serviced loans for borrowers in the southeastern region before they were awarded a federal student loan contract in 2012 and made federal loans their primary focus.
At the close of 2017, EdFinancial services were responsible for servicing 15% of student loans originated by the federal government, though federal loan allocation can and does change year over year.
In addition to federal student loans, EdFinancial continues to service private student loans for a select group of lenders. This EdFinancial review will tell you everything you need to know about the servicer.
In this review:
- First, What is a Loan Servicer?
- EdFinancial Student Loan Servicer Overview
- Repayment Options Offered by EdFinancial
- What EdFinancial Does Well
- Problems with EdFinancial Loan Servicing
First, What is a Loan Servicer?
Student loans are complex and often accompanied by a slew of confusing terms and concepts. Two of those terms are “servicer” and “lender.”
Lenders are those financial institutions that approve, originate, and disburse the loan funds. These institutions are also responsible for setting interest rates and terms. In the case of federal loans, the U.S. Department of Education is the lender.
However, most lenders outsource the management of their loans, including borrower relations and repayment activities. Loan servicers work with borrowers to schedule and manage repayment options, answer questions, and maintain ongoing collection efforts.
In the case of federal student loans, the Department of Education hands over management responsibilities to federal loan servicers like Navient, Nelnet, and EdFinancial. This is the company you’ll remit payments to and contact if you have any questions.
EdFinancial Student Loan Servicer Overview
As indicated above, EdFinancial is a loan servicer, and therefore, they take on the responsibility of managing student loan relationships. EdFinancial does service private student loans, but federal student loan servicing has become their primary duty.
As such, EdFinancial manages Federal Direct Unsubsidized and Subsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans as well as loans extended through the Federal Family Education Loan.
Repayment Options Offered by EdFinancial
As any borrower knows, your ability to repay your loans can change based on a variety of factors, including your income. Most servicers, including EdFinancial, will offer various repayment options to accommodate the financial shifts that a borrower experiences over the life of a loan.
The student loan repayment options through EdFinancial depend on the loan type. Private lenders often set their own unique repayment terms; therefore, the options available to those who have private loans serviced by EdFinancial will depend entirely on the options set forth by the lender.
If you have a private loan through EdFinancial and want to learn more about your repayment options, you should contact EdFinancial directly, as their website offers limited information specific to private borrowers.
If you are a federal borrower, EdFinancial provides a variety of repayment options, all of which are dictated by the federal government. Included among the repayment options extended to eligible EdFinancial customers are the following income-driven repayment plans:
Income-Based Repayment (IBR)
Available to borrowers with Direct or FFEL loans, the IBR plan allows federal student loan borrowers to make payments based on their total debt, income, family size, and the state in which they reside.
To be eligible, borrowers must experience “partial financial hardship,” which means that their annual federal loan payment exceeds 10% (loans issued after 2014) or 15% (loans issued before 2014) of the difference between their adjusted gross income and 150% of the poverty line relative to their family size.
Borrowers enrolled in this plan must make qualifying monthly payments for 20 to 25 years, depending on the date their loan was issued. After the designated period of time has passed, any remaining student loan debt will be “forgiven.”
Revised Pay As You Earn (REPAYE)
Available to Direct Loan borrowers, the REPAYE program may offer lower monthly payments based on the borrower’s existing federal debt, income, and family size.
Unlike IBR, this program offers interest subsidies to prevent ballooning loan balances and is not limited by disbursement date restrictions.
Borrowers must make monthly qualifying payments for 20 years (for undergrad loans) or 25 years (for graduate loans), at which point the remaining balance becomes eligible for student loan forgiveness.
Available to all federal Direct Loan borrowers, the Income-Contingent Repayment plan allows borrowers to make payments based on their existing federal debt, income, and family size.
Payments are less than 20% of the borrower’s discretionary income or the total they would repay over 12 years when using a standard amortization based on their annual gross income.
After making monthly qualifying payments for 25 years, the remaining debt is eligible for forgiveness.
Learn More About These Repayment Options
For many, these payments offer a way to balance loan demands and their existing income, with the expectation that borrowers will be able to make higher payments over time.
If you’d like to learn more about these or other available repayment options, you can visit the Edfinancial Help Center or StudentLoans.gov. However, it’s always best to speak directly to your loan servicer to determine what options are best for your current financial situation.
What EdFinancial Does Well
If you have federal student loans and EdFinancial is your designated loan servicer, then you may find that their website offers a variety of resources and tools to help you understand and manage your student loans.
These types of resources aren’t unique to EdFinancial, but their site design does make it easy for borrowers to navigate to the resources they need. This is particularly helpful when trying to understand and manage your loans.
One of the resources that borrowers should check out is the student loan calculator, which can be used to preview various repayment options and how they may impact your loan, including interest paid and time to repayment.
EdFinancial also dedicates an entire page to military benefits, making it easier for those who serve to access information about benefits and repayment options reserved for student loan borrowers in the military. This includes a designated email and customer service line for service members.
Problems with EdFinancial Loan Servicing
One area where EdFinancial falls short is in the information they provide about private student loans.
If you’re a federal student loan customer who was assigned to EdFinancial, their resource center may be extremely helpful, but for those who have private loans serviced by EdFinancial, information, including repayment options, may not be as easy to come by.
In fact, it’s extremely difficult to locate any specific information about private student loans on the site, and the same seemed to be true when interacting with customer service reps, though they do have a department designated to managing private loans.
Beyond that, and perhaps more concerning for those who have loans serviced by EdFinancial, is the number of complaints on the Consumer Financial Protection Bureau (CFPB) and the Better Business Bureau (BBB).
One of the most prevalent complaints on both sites has to do with credit reporting activities, specifically incorrect information appearing on credit reports. This can be problematic for borrowers who are already dealing with credit scores impacted by their outstanding debt.
Bottom Line: Is EdFinancial a Good Student Loan Servicer?
If EdFinancial is your loan servicer, you may not have many options when it comes to seeking out alternatives; this is particularly true for federal borrowers. That may be discouraging, particularly since there are several complaints about EdFinancial’s credit reporting activities.
If you did really want a new servicer, refinancing your student loans may be an option.
On the bright side, the website really does offer a plethora of resources, and customer service reps are frequently willing to help borrowers find the best repayment options.
At the end of the day, all borrowers should carefully monitor their account as well as their credit report to make sure payments are correctly allocated and the information is correct—loans serviced by EdFinancial aren’t any different.