American Education Services (AES) Loans Review

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American Education Services (AES) Loans Review

Who is American Education Services (AES)? They are currently one of the largest student loan servicers in the United States, managing more than four million AES student loans and serving thousands of schools.

Originally founded in 1963 under the Pennsylvania Higher Education Assistance Agency (PHEAA), AES was created with the goal of guaranteeing and servicing a collection of private student loan and Federal Family Education Loan Program (FFELP) products for national lending partners.

The AES/PHEAA is a quasi-governmental agency, meaning it’s partly controlled and or financed by government bodies.

All earnings from loan products are used to support its mission and cover operating and admin costs of state-funded student aid programs and the Pennsylvania State Grant.

To recap:

  • There are currently more than 4 million AES student loans being managed.
  • The company was founded in 1963 under the Pennsylvania Higher Education Assistance Agency (PHEAA).
  • Earnings are used to cover admin and operating costs.

AES Loans Review: What does American Education Services Do?

The National Student Loan Data System states in a report that AES services nearly 4.5 million student loans borrowers who carry—in total—an outstanding balance of close to $156 billion in student debt.

It is worth noting that not all of this balance originates with AES. Some of it has been factored in from federal loans that stem from the Federal Family Education Loan Program.

The Federal Family Education Loan Program (FFEL), was a program that ran from 1965 until 2010. Private student loans were guaranteed and subsidized by the federal government.

While that program is now obsolete, the millions of borrowers who are still repaying student loan debt that originated with FFEL now have AES as their student loan servicer.

To recap:

  • AES services close to $156 billion in debt.
  • Some of that balance originates with loans given to borrowers under the Federal Family Education Loan Program, now covered by AES loan servicing.

  › AES is Not a Lender

While AES does help in the facilitation of loans, it’s important to note that they don’t do any actual lending themselves. You cannot apply for a loan on the AES website.

So, how does it work? If you are looking for a student loan you need to apply through qualified channels such as specific lenders or your financial institution.  Or even the Department of Education.

The private lenders themselves carry the responsibility of setting their own interest rates and terms. They are also in charge of dispersing all funds.

Remember, all American Education Services does is service existing loan accounts.

  › AES is a Loan Manager

As stated above, AES does not lend money. That is not the service they provide.

So what does it mean that they are a manager?

  • Their job is to accept and process all the student loan payments under their umbrella.
  • Help manage borrowers who want or need to make changes to their payment due dates.
  • Give aid to borrowers trying to qualify for forgiveness and discharge programs.
  • They also support several federal repayment programs.
  • They help borrowers understand the various repayment options available to them.
  • Educate borrowers with regard to their rights, which include any deferment or forbearance options that may be available to them.
  • They act as a facilitator between the lender and borrower.
  • Manage the organization website

What does all this mean to you as the borrower?

After your loan is approved and you get your funds, your direct relationship with the lender pretty much ends. You now begin a new relationship with the manager of your loan, in this case, AES.

  › AES Student Loan Repayment Options

Not everyone is on track to be able to pay off their student loans fast. Frankly, I would say few are.

Fortunately, there are several repayment options available, many for those who are struggling under the burden of paying back their loans.

There are a few distinct criteria at play, however.

  • Any borrowers who have private loans—AES speaks of these as being alternative loans—don’t have as many options and likely need to contact the lender for options.
  • In contrast, borrowers who carry federal student loans are completely serviced by AES and may be eligible for more options. These options include:
    • Income-Based Repayment (IBR). Borrowers are able to make payments based on their income, family size, and debt load. These are typically capped at 10% or 15% of discretionary income. Loans under this plan are eligible for loan forgiveness after 20 or 25 depending on when the loan was obtained.
    • Income Contingent Repayment Plan (ICR). Under this plan a borrower can pay whichever is less—the amount they would pay on a fixed payment plan based on a 12-year term and adjusted to income or 20% of their discretionary income. Any loans under this plan are eligible for forgiveness after 25 years assuming all eligible monthly payments have been made.
    • Graduated Repayment Plan. Those making payments under this plan are able to make smaller payments when the loan repayment period starts, with loan payments increasing over time. There is also a provision—in some cases—for borrowers to make interest-only payments for a short period of time.
    • Revised Pay as You Earn Repayment Plan (REPAYE). This plan is much the same as the IBR, but it comes with fewer restrictions. With REPAYE, borrowers need to repay 10% of their discretionary income. Undergrad loans are eligible for forgiveness after 20 years, and graduate or professional study loans are eligible after 25 years.
    • 25-Year Extended Plan. As the name suggests, this extends a 10-year repayment term over 25 years. This comes with a catch. Your monthly payments will drop but you will ultimately pay back even more due to an increased interest rate.

The above list doesn’t include all options. For that, please refer to the Repayment Plans page on the site.

You have the option of refinancing your AES student loans. However, if you decide to refinance, you must consider the impact of losing income-driven repayment options and forgiveness (after consolidating).

Final Thoughts

AES school loans and AES graduate loan services have been available for a long time. Many have successfully used their services and moved on, now debt-free.

Is AES perfect? Far from it. When you service the sheer number of accounts they do, there will be some bad mixed with the good.

However, remember this. According to customers who have negative experiences are more likely to leave reviews. On the other hand, customers who have positive experiences are more likely to simply move on, and rarely leave reviews.

So just because the bad reviews are easier to find than the good reviews, it doesn’t mean there aren’t more satisfied customers than dissatisfied or unhappy customers.