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Pennsylvania Higher Education Assistance Agency Said Thursday Once it expires in December, it will not extend the federal student loan service contract with the Ministry of Education. It agreed to continue working with the Federal Office of Student Aid until all borrowers transitioned to different service agencies.

PHEAA operates as FedLoan Servicing and currently manages loans for 8.5 million borrowers and provides services for public service loan relief and teacher education assistance for universities and higher education grant programs. Richard Cordray, chief operating officer of Federal Student Aid, said the office will work with PHEAA to develop a reduction plan to facilitate a smooth transition for borrowers and projects.

Cordray said: “The program is characterized by early and frequent communication and clear guidance on the borrower’s expectations, as well as strong supervision by the FSA during the transition period. “The U.S. Department of Education is committed to using all of the tools in our toolbox. Tools to ensure that the borrower is supported during this transition period and will not be negatively affected. “

PHEAA became a federal service agency in 2009 to diversify business operations after the Great Depression. The agency said it now wants to refocus “its core mission to the Commonwealth of Pennsylvania.”

“In the 12 years since PHEAA accepted the terms of its federal service contract, federal loan programs administered by the U.S. Department of Education have become more complex and challenging, and the cost of providing services to these programs has increased dramatically,” PHEAA said In one version.

In recent years, the agency has come under fire for its management of the PSLF and TEACH Grant programs. Massachusetts with new York Both sued PHEAA for mismanagement of the federal loan relief program and allegedly prevented borrowers from waiving or reducing loans. It is also accused of improperly converting TEACH Grants into loans that teachers must repay.

Massachusetts litigation solved Earlier this year, a company spokesperson said that the settlement agreement “didn’t admit wrongdoing.”

Senator Elizabeth Warren of Massachusetts, Democrat Who has been criticizing the management of student loan programs, Cheered for PHEAA’s withdrawal from federal student loan services.

“Today, millions of borrowers can breathe a sigh of relief because their loans will no longer be managed by PHEAA. The organization has plundered the debt relief of countless civil servants and was recently found to have lied to Congress about its poor fine record. And punishment,” Warren said in a statement.

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