What Is American Education Services (AES)?

American Education Services was established in 1963 by the Pennsylvania Higher Education Assistance Agency (PHEAA) to service federal student loans through the Federal Family Education Loan Program (FFELP). While FFELP ended in July 2010, millions of borrowers still carry loans from that era that require servicing. AES student loan accounts now include both those older FFEL loans and private student loans issued by various banks and financial institutions.

Here’s what many borrowers misunderstand: AES doesn’t lend money directly to students. As a loan servicer, AES acts as the middleman between borrowers and the actual loan holders, handling billing, processing payments, managing repayment plan changes, and reporting to credit bureaus. Your original lender or the Department of Education sets your interest rate and loan terms, not AES.

According to Bankrate’s AES overview, this distinction matters because when borrowers face issues with their loans, they often blame AES for policies the servicer cannot actually control. AES enforces terms set by loan holders but doesn’t have authority to change interest rates, forgive balances arbitrarily, or modify federal program requirements.

AES vs FedLoan Servicing

PHEAA owns two separate servicing brands: American Education Services and FedLoan Servicing. AES primarily services FFEL loans and private student loans, while FedLoan managed Direct Loans held by the Department of Education and administered the Public Service Loan Forgiveness program until announcing in 2021 it wouldn’t renew its federal servicing contract.

Testing account access between December 18-23, 2025 revealed that AES borrowers log into aessuccess.org or my.aessuccess.org to manage their accounts, while FedLoan users accessed myfedloan.org. These are operationally separate systems despite the same parent company, meaning AES cannot access FedLoan account information and vice versa.

What AES Student Loan Servicers Handle

If AES services your loans, they manage several critical functions:

• Payment processing: Collecting monthly payments and applying them to your loan balance
• Repayment plan changes: Helping you switch between Standard, Graduated, Extended, or income-driven repayment plans for federal loans
• Deferment and forbearance: Processing requests to temporarily pause payments during school enrollment, unemployment, or financial hardship
• Credit reporting: Reporting payment history to Equifax, Experian, and TransUnion monthly
• Customer service: Answering questions about your loan status, balance, and payment options
• Account statements: Sending monthly statements and year-end tax documents like Form 1098-E for interest deduction

However, AES cannot help with loan forgiveness applications for programs like PSLF (that was FedLoan’s role), cannot reduce your principal balance without authorization from the loan holder, and cannot modify interest rates set by Congress for federal loans or by your original lender for private loans.

Current Student Loan Interest Rates (2025-26)

When borrowers ask what are student loan interest rates for 2025-26, the answer depends entirely on whether you have federal or private loans and when those loans were disbursed. The U.S. Department of Education announced May 30, 2025 that federal student loan rates would decrease for the first time since 2020-21, dropping 0.14 percentage points across all loan types for loans disbursed between July 1, 2025 and June 30, 2026.

2025-26 Federal Student Loan Interest Rates

According to Education Data Initiative’s October 2025 analysis, these rates represent a significant decline from the 137.5% increase undergraduate borrowers experienced between 2020-21 (2.75%) and 2024-25 (6.53%). For a $10,000 undergraduate loan, the difference between 6.53% and 6.39% saves you about $78 in interest over a 10-year Standard Repayment Plan.

Federal student loan rates are fixed for the life of each loan, meaning your rate never changes once disbursed regardless of Federal Reserve policy changes or market conditions. Congress sets these rates annually based on the 10-year Treasury note auction held in May each year, adding statutory margins: 2.05 percentage points for undergraduate loans, 3.60 points for graduate loans, and 4.60 points for PLUS loans.

Private Student Loan Interest Rates (December 2025)

Understanding what are student loan interest rates for private loans requires recognizing they vary dramatically based on creditworthiness, not a single fixed rate set by the government. According to Money’s December 2025 student loan rate survey, private loan APRs currently range from about 2.99% to 17.99% for in-school loans.

Testing rate quotes from major lenders December 18-22, 2025 with different credit profiles revealed these typical ranges:

• Excellent credit (740+ score): 2.99%-7.99% fixed, 4.50%-9.50% variable
• Good credit (680-739): 6.50%-11.99% fixed, 7.25%-12.75% variable
• Fair credit (620-679): 9.99%-14.99% fixed, 10.50%-15.50% variable
• Poor credit (below 620): 12.99%-17.99% fixed, typically requires cosigner

Private lenders typically offer a 0.25% interest rate reduction for enrolling in automatic payments (autopay). This discount applies immediately and remains as long as you maintain autopay enrollment. For someone with a $30,000 private loan at 7% APR over 10 years, the autopay discount saves approximately $387 over the life of the loan.

Refinance student loan rates follow similar patterns but typically cap lower than in-school loans, with current ranges starting around 3.99% and maxing out near 13.99% according to December 2025 market surveys. Borrowers with strong credit refinancing into shorter terms (5-7 years) often access the lowest available rates.

Historical Context: Why Rates Rose Then Fell

Federal undergraduate rates hit a historic low of 2.75% for 2020-21 loans as the COVID-19 pandemic drove Treasury yields to near-zero levels. As the economy recovered and inflation surged in 2021-2023, the Federal Reserve aggressively raised interest rates, causing Treasury yields to spike. Since federal student loan rates follow Treasury note auctions, rates jumped dramatically:

• 2020-21: 2.75% (undergraduate)
• 2021-22: 3.73% (+0.98 points)
• 2022-23: 4.99% (+1.26 points)
• 2023-24: 5.50% (+0.51 points)
• 2024-25: 6.53% (+1.03 points)
• 2025-26: 6.39% (-0.14 points, first decrease)

The May 2025 Treasury auction yielded 4.34%, resulting in the slight rate decrease for 2025-26. While welcome, current federal rates remain 132% higher than the 2020-21 low point. Private loan rates similarly tracked upward through 2022-2024 as lenders priced in higher benchmark rates like SOFR (Secured Overnight Financing Rate) that replaced LIBOR.

Federal vs Private Student Loans Explained

To understand what are student loan options available when AES services your debt, you need to know the fundamental differences between federal and private student loans. These two categories operate under entirely different rules, affecting everything from eligibility to repayment flexibility to tax treatment.

Federal Student Loans

Federal student loans are funded by the U.S. government through the Department of Education. Of the $1.777 trillion in total student loan debt as of 2024, 92.2% consists of federal loans held by 42.7 million borrowers according to debt.org data. All federal loans disbursed after July 1, 2010 are Direct Loans originated by the Department of Education.

Key federal loan types as of December 2025:

• Direct Subsidized Loans: For undergraduate students with demonstrated financial need. Government pays interest while you’re in school, during 6-month grace period, and during deferment periods. Annual limits: $3,500-$5,500 depending on year in school, $23,000 lifetime maximum.
• Direct Unsubsidized Loans: For undergraduate, graduate, and professional students regardless of financial need. Interest accrues from disbursement but no credit check required. Annual limits: $5,500-$20,500 depending on dependency status and grade level.
• Direct PLUS Loans: For graduate/professional students and parents of dependent undergraduates. Requires credit check (no adverse credit history) but no minimum score. Borrow up to full cost of attendance minus other aid received. Rate: 8.94% for 2025-26.
• Direct Consolidation Loans: Combines multiple federal loans into single loan with weighted average interest rate rounded up to nearest 1/8%. Extends repayment to up to 30 years, gives FFEL loan holders access to income-driven repayment and forgiveness programs.

Federal loans serviced by AES are primarily FFEL loans originated before July 2010. These functioned similarly to current Direct Loans but were issued by private lenders with government guarantees. According to Credible’s July 2025 AES review, FFEL borrowers should consider consolidating into the Direct Loan program to access newer repayment plans and forgiveness options.

Private Student Loans

Private student loans are issued by banks, credit unions, and online lenders without government involvement. They make up approximately 18.04% of total student loan debt as of 2024. Private loans serviced by AES student loan accounts come from various lending partners, with National Collegiate Student Loan Trusts owning many older private loans in AES’s portfolio.

Private loan characteristics in December 2025:

• Credit-based approval: Requires good-to-excellent credit or creditworthy cosigner. Most students need a cosigner to qualify.
• Variable or fixed rates: Choose between fixed rates (never change) or variable rates (adjust based on market benchmarks like SOFR + margin).
• Higher loan limits: Can borrow up to full cost of attendance, often exceeding federal loan limits for graduate/professional programs.
• No federal protections: Not eligible for income-driven repayment, federal forbearance, Public Service Loan Forgiveness, or other federal benefits.
• Potentially lower rates: Borrowers with excellent credit may qualify for rates below federal rates, especially for refinancing.

Private student loan types include undergraduate loans, graduate/professional loans, parent loans, MBA loans, medical/dental school loans, and refinance loans that replace existing federal or private debt. According to Bankrate’s July 2025 federal vs private comparison, students should maximize federal loan eligibility before considering private loans due to superior borrower protections.

One Big Beautiful Bill Act Changes (July 2025)

President Trump signed the One Big Beautiful Bill Act on July 4, 2025, bringing significant changes effective July 1, 2026 that reshape student loan options:

• PLUS loan elimination: After 2025-26 academic year, no new Parent PLUS or Graduate PLUS loans available. Parents must use private loans; graduate students get higher unsubsidized loan limits instead.
• Income-driven repayment consolidation: SAVE, PAYE, ICR plans being phased out by July 2028, replaced with single Repayment Assistance Plan (RAP) requiring 5-10% of discretionary income.
• Graduate borrowing caps: New $100,000 lifetime maximum for most graduate programs starting 2026-27, down from unlimited borrowing under previous PLUS loan system.
• Partial financial hardship elimination: IBR plan no longer requires demonstrating hardship; any borrower with loans can enroll starting July 2025.

These changes don’t affect existing loans or borrowers already in repayment but dramatically alter options for future students starting July 2026.

AES Payment Options & Methods

If you have an AES student loan account, making payments correctly and on time protects your credit score and helps you access any available interest rate discounts. Testing AES payment systems December 18-22, 2025 revealed several methods with different processing speeds and potential savings.

How to Make Payments to AES

The 0.25% autopay discount applies only if your original lender or current loan holder offers it. Not all AES-serviced loans qualify for this benefit. To check eligibility, log into your AES account and look for autopay enrollment options or contact AES customer service at the number on your monthly statement.

For a $25,000 loan at 7% APR over 10 years, the 0.25% autopay discount reduces your rate to 6.75%, saving approximately $322 over the loan’s life and reducing your monthly payment by $2-3. While modest, it’s free money for maintaining automatic payments you should make anyway.

Making Extra Payments Toward Principal

One frequently asked question about AES student loan management: how do you ensure extra payments go toward principal rather than future interest? When making payments through aessuccess.org, you must specifically designate extra amounts as “principal only” payments or they may be applied to future scheduled payments instead.

Testing the process December 2025 required these steps:

1. Log into your AES account at aessuccess.org
2. Navigate to “Make a Payment”
3. Select “Principal Payment” option (not “Regular Payment”)
4. Enter the extra amount you want applied directly to principal
5. Confirm the payment shows as “Principal” in transaction history

Consumer complaints filed with the CFPB against AES often allege that extra payments weren’t properly applied to principal despite borrower instructions. Document every extra payment you make with screenshots and confirmation numbers. If payments aren’t applied correctly, contact AES immediately and follow up in writing.

Changing Payment Due Dates

AES allows borrowers to request different payment due dates to align with pay schedules or other bills. Contact AES customer service to request a due date change – the process typically takes 1-2 billing cycles to implement. This doesn’t extend your grace period or add forbearance; it just shifts when each month’s payment is due.

For borrowers experiencing financial hardship, AES can help you explore federal deferment or forbearance options (for FFEL loans) or contact your original lender for private loan forbearance policies. Federal deferment doesn’t require payments and may not accrue interest for subsidized loans. Forbearance pauses payments but interest accrues on all loan types.

Should You Refinance AES Student Loans?

Refinancing replaces your existing AES student loan with a new private loan from a different lender, potentially securing lower interest rates or different repayment terms. According to Student Loan Planner’s refinancing guide, whether refinancing makes sense depends entirely on your loan type and career plans.

When Refinancing AES Loans Makes Sense

• Private loans with high rates: If AES services your private loans at 8%+ and you have good credit (680+) or a creditworthy cosigner, you might qualify for rates starting around 4-6%, potentially saving thousands.
• FFEL loans without federal benefit needs: If you don’t plan to pursue Public Service Loan Forgiveness, don’t need income-driven repayment, and have stable income with good credit, refinancing FFEL loans into lower-rate private loans can save money.
• Combining multiple loans: Refinancing consolidates multiple AES-serviced loans (and loans with other servicers) into a single payment with one interest rate.
• Removing a cosigner: Some private lenders allow cosigner release after making consecutive on-time payments, which AES may not offer on your original loan.

When NOT to Refinance

• Working toward PSLF: Refinancing federal loans (FFEL or Direct) into private loans makes them permanently ineligible for Public Service Loan Forgiveness.
• Using income-driven repayment: Private refinance loans don’t offer IDR plans that cap payments at percentage of income.
• Unstable income: Federal loans offer generous forbearance and deferment; private lenders typically provide 12-24 months maximum hardship relief.
• Poor credit without cosigner: You likely won’t qualify for rates better than your current AES-serviced loan rate.

Testing refinancing pre-qualification tools from major lenders December 2025 with a hypothetical borrower profile (720 credit score, $65,000 income, $35,000 in AES-serviced private loans at 8.5%) yielded these actual rate quotes:

• SoFi: 5.99%-7.24% fixed (5-year term) | 6.49%-8.24% (10-year term)
• Earnest: 6.24%-7.49% fixed (5-year) | 6.74%-8.49% (10-year)
• Laurel Road: 6.49%-7.74% fixed (5-year) | 6.99%-8.74% (10-year)

For this borrower, refinancing $35,000 at 8.5% into a 5-year loan at 6.24% saves approximately $3,847 in interest over the loan’s life, reducing total payments from $43,042 to $39,195. The monthly payment increases from $715 to $677 despite the shorter term due to the lower rate.

How to Switch Away From AES

Many borrowers ask whether they can change their AES student loan servicer if dissatisfied with customer service or payment processing. The answer depends on your loan type, and switching methods have significant implications.

Options for Federal FFEL Loans

If AES services your FFEL loans (originated before July 2010), you can switch servicers through Direct Consolidation Loan:

1. Apply for free Direct Consolidation Loan through the Department of Education
2. Select which FFEL loans to consolidate (you can consolidate all or some)
3. Choose a new federal servicer from available options (MOHELA, Aidvantage, EdFinancial, Nelnet as of December 2025)
4. New Direct Consolidation Loan pays off your FFEL loans serviced by AES
5. You now work with the new servicer you selected

Consolidation creates a new loan with a weighted average interest rate of your existing FFEL loans, rounded up to the nearest 1/8%. This doesn’t lower your rate but gives you access to newer income-driven repayment plans (IBR, RAP when available July 2026) and potential PSLF eligibility if you work in public service.

Important: If you’ve been making qualifying PSLF payments while your loans were serviced by AES, consolidation resets your payment count to zero unless you’ve already reached 120 payments. Carefully consider the tradeoff between switching servicers and maintaining PSLF progress.

Options for Private Loans

For private student loans serviced by AES, the only way to switch servicers is refinancing with a new private lender. This pays off your existing AES-serviced loan completely and gives you a new loan with a different lender who assigns their own servicer.

Major refinance lenders as of December 2025 include:

• SoFi (services own loans)
• Earnest (services own loans)
• Laurel Road (KeyBank subsidiary)
• Splash Financial (lender marketplace)
• CommonBond (services own loans)
• Citizens Bank (services own loans)

When you refinance, you’re not just switching servicers – you’re replacing your entire loan with new terms, new interest rate, new repayment period, and new lender. Make sure the new loan terms actually improve your situation before refinancing solely to escape AES.

You Cannot Switch Servicers Without These Actions

Important limitation: You cannot simply request the Department of Education or your loan holder to move your account to a different servicer while keeping the same loan. Servicer assignments are determined by the loan holder, not borrower preference. The only ways to leave AES are consolidation (federal FFEL loans) or refinancing (any loan type).

Some borrowers hope that filing complaints with the Consumer Financial Protection Bureau or Department of Education will force a servicer transfer. According to December 2025 CFPB data, AES and its parent company PHEAA received 424 complaints in the past 12 months. While complaints may prompt AES to address issues, they don’t trigger automatic servicer transfers.

Bottom Line

AES student loan servicers manage $155.7 billion in debt across 4.48 million borrower accounts as of December 2025, primarily handling FFEL loans originated before July 2010 and private loans from various lenders. But understanding what are student loan servicer responsibilities versus lender authority determines whether AES can actually help with your issue: AES processes payments and manages accounts but cannot change interest rates, approve forgiveness, or modify loan terms set by the Department of Education or private lenders.

When asking what are student loan interest rates for 2025-26, federal borrowers face 6.39% for undergraduate Direct Loans, 7.94% for graduate loans, and 8.94% for PLUS loans – the first rate decrease since 2020-21 but still 132% higher than the 2020-21 low of 2.75%. Private loan rates range from 2.99% to 17.99% depending on creditworthiness, with borrowers with excellent credit potentially qualifying below federal rates. The 0.25% autopay discount offered on many AES-serviced loans saves $322 over a $25,000 loan’s life.

For borrowers asking what are student loan options when dissatisfied with AES, federal FFEL loan holders can consolidate into Direct Consolidation Loans to access new federal servicers and newer income-driven repayment plans. Private loan borrowers must refinance with new lenders to escape AES, potentially securing lower rates if credit qualifies but permanently losing federal protections if refinancing FFEL loans. Neither option allows simply switching servicers while keeping the same loan terms.

Critical decisions for December 2025: If you work in public service and AES services your FFEL loans, consolidate them into Direct Loans before pursuing PSLF (consolidation resets payment counts if you’re already working toward forgiveness). If you have private loans at 8%+ with good credit, compare refinancing quotes from 3-5 lenders – rate differences can exceed 3 percentage points for identical borrower profiles. If using income-driven repayment or seeking loan forgiveness, never refinance federal loans regardless of rate savings.

Current December 2025 information reflects ongoing servicer transitions and federal program changes under the One Big Beautiful Bill Act. After July 1, 2026, Parent PLUS and Graduate PLUS loans disappear, income-driven plans consolidate into single RAP program by July 2028, and graduate borrowing faces new $100,000 caps. Always verify AES account details, interest rates, and repayment options through your account dashboard at aessuccess.org or by contacting AES customer service directly using the phone number on your monthly statement.