Kristi Cruz could make her last college loan payment in February when the 49-year-old public-interest attorney qualifies for a federal program that will forgive her remaining $43,000 law school debt. Cruz’s journey for college-debt freedom has taken more than a decade.

But will it be yanked away at the last minute?

FedLoan — which operates as a subsidiary of the Pennsylvania Higher Education Assistance Agency (PHEAA) — dropped a bombshell earlier this month, telling the federal Department of Education that it won’t seek an extension of a 12-year government contract to collect payments for millions of borrowers on a portfolio of federal education loans.

FedLoan, one of several government-approved contractors servicing 44 million education-loan borrowers, has been the target of lawsuits and audits over customer service. So its decision would seem to be a relief to reform advocates and borrowers.

But its action has led to the opposite reaction among some: concerns over what happens this fall when the huge federal loan-servicing apparatus starts collecting loan payments again.

Borrowers haven’t had to make payments on federal education loans during the pandemic and are expected to resume doing so on Sept. 30.

At the same time, the Education Department will be developing plans to move PHEAA’s $390 billion loan portfolio to a new servicer.

Some of those FedLoan borrowers like Cruz participate in the Public Service Loan Forgiveness program for government, law enforcement, and nonprofit employees. That effort has faced criticism from the many applicants who have been rejected after applying for it. Millions of more borrowers serviced by FedLoan are simply paying off their college loans.

Persis Yu, director of the Student Loan Borrower Assistance Center at the National Consumer Law Center, said the FedLoan transition will be “a massive shift in a short time for many folks. We don’t have a great precedent for transfers of this size.”

Borrowers should expect that some records may be lost in the transition. “If I was a FedLoan borrower, I would be trying hard to get these records, but I don’t know if they can do it in the time before the transition,” Yu said. Most people, she said, “do not keep their own records. There is currently a queue of people trying to resolve issues with FedLoan.”

Even for Yu, who advocates for borrowers, “it takes a long time to get the records,” she said.

Cruz, of Seattle, says she has heeded the terms of the government’s Public Service Loan Forgiveness program for more than a decade, certifying her income regularly and sending her monthly loan payments.

But mistakes have been made. She has had to correct errors and write letters of appeal. “Some weeks or months it seems like an added job to convince FedLoan to fix things,” Cruz said, though, over time, she and FedLoan came to a “good place.”

“We’re on the same page.”

Now, this. She could be dealing with a new servicer before forgiveness. Will she have to prove herself all over again? “It’s terrible timing for me,” Cruz said. “I’m so close, and now they’re going to pull it away. I don’t see how this will get better under one service provider or another.”

PHEAA spokesman Keith New said last week that the agency will not seek an extension of its federal contract, which expires Dec. 14, “beyond what is needed to ensure a smooth transition to a new servicer.” Still, the transition could last well into 2022, he said.

PHEAA’s decision comes at a pivotal moment for the federal education loan-servicing sector.

Since President Joe Biden took office in January, the White House has appointed new top-level officials to the Education Department who are viewed as sympathetic to borrowers and less friendly to federal loan services, such as FedLoan and the publicly traded Navient, based in Wilmington.

Critics say that servicers have mismanaged the business and some of their decisions generated higher fees and costs for borrowers that benefit the companies. They deny this.

In February, PHEAA settled a lawsuit filed by Massachusetts Attorney General Maura Healey over claims of loan-servicing errors. About 200,000 Massachusetts borrowers whose federal loans are serviced by PHEAA can submit a claim for a detailed review of their account. PHEAA neither admitted nor denied wrongdoing.

Then in April, James Steeley, the chief executive officer at PHEAA and one of Pennsylvania’s highest-paid state employees with a compensation of $334,950, faced a grilling by U.S. Sen. Elizabeth Warren (D., Mass.) during an Economic Policy Subcommittee hearing on federal loan servicers.

Warren, who chairs the subcommittee, claimed that lawsuits and investigations show that PHEAA “systematically undercounts” borrower payments, leading to rejection rates for those attempting to qualify for the Public Service Loan Forgiveness program. Of 225,000 borrowers who have applied to have their loans forgiven, only 2% have had their loans forgiven, Warren said.

PHEAA doesn’t undercount payments, Steeley told Warren. The high rejection rate was because people hadn’t made sufficient payments to qualify for forgiveness. “We strive day in and day out to do our best for the people of Pennsylvania, for the customers we service,” he told Warren. “We advocate on their behalf for program improvements to increase those forgiveness rates.”

After the hearing, Warren and U.S. Sen. John Kennedy (R., La.) sent a letter to Steeley “on what appears to be false and misleading testimony.”

Steeley testified that PHEAA was not penalized for its management of the Public Service Loan Forgiveness program, the letter said. But nine reviews of the program since 2016 show “four corrective action plans and two fines, each more than $100,000,” the letter said. Warren and Kennedy asked Steeley to explain his comments by July 7. PHEAA did not respond to questions on Steeley’s testimony.

On July 8, the Pennsylvania agency made the surprise announcement that it would not seek an extension on the federal loan-servicing contract, calling it a business decision. Steeley said in the past that the federal contract was not as profitable as it had been in its early years. “Millions of loan borrowers can breathe a sigh of relief today knowing that their loans will no longer be managed by PHEAA,” Warren said in response to PHEAA’s announcement.

What comes next has people guessing. Some have called for the government to extend the moratorium on federal loan payments beyond Sept. 30.

Some believe that the Missouri Higher Education Loan Authority, which borrowers know as MOHELA, could have an inside track to replacing FedLoan as a federal servicer. The federal government also could select other servicers.

New, the PHEAA spokesman, said that while the agency will assist in the transition to a new company, “it is solely the [Education] Department’s decision” to pick a servicer.

A big question is what will happen to the 2,500 customer phone reps and other employees, mostly based in Harrisburg, for PHEAA. The agency will continue to service loans for other groups and Pennsylvania college students. But the federal contract produced significant revenue.

“Some staff reductions may be inevitable,” New said. PHEAA expects some employees to leave under normal turnover, New said, but it’s too early to estimate job cutbacks.