Department of Education announces major overhaul of student loan service – Forbes | Vette Leader

The US Department of Education announced a major overhaul of student loan administration.

Here’s what you need to know – and what it means for your student loans.

student loans

The Education Department said Thursday that more than 35 million student loan borrowers can expect a “21st century customer experience” from their student loans. Federal Student Aid, the largest provider of financial aid to colleges in the United States, has issued a tender for the Unified Servicing and Data Solution (USDS) to serve as a long-term student loan management solution for federal student loan borrowers. In particular, the USDS will seek to hold student loan service providers accountable with clear performance goals, such as: Special:

  • six loan officers assist student loan borrowers during student loan repayments;
  • Student loan administrators operate independent websites, have independent staff, and communicate individually with student loan borrowers;
  • Given the lack of a centralized platform, student loan borrowers may have varied customer service experiences, which can be confusing; and
  • As a result, student loan borrowers often receive conflicting or incorrect information about possible student loan repayment options, which can result in student loan default.

This latest announcement is part of a broader, ongoing initiative within the Biden administration to simplify student loan repayments, increase student loan forgiveness, and maintain student loan service providers to a higher standard. (Student Loan Forgiveness: 5 Key Takeaways from the Big Announcement).


Student Loans: How this new system will help student loan borrowers

The new customer service platform aims to help student loan borrowers in a number of ways, including:

  • replacing old student loan administration contracts for both direct loans and state-administered FFELP loans;
  • Offer federal student loan borrowers complete management of their student loans through StudentAid.gov;
  • Provide a more seamless transition for student loan account transfers;
  • expand accountability for student loan administrators through measurable benchmarks; and
  • Overseeing student loan service providers to reduce student loan arrears and defaults.

Student Loan Service Providers: What Changes Should Student Loan Borrowers Expect?

Current student loan servicing contracts expire in December 2023. Federal Student Aid expects to decide on new student loan service providers this winter, with new service providers starting when current contracts expire. Student loan borrowers can expect several changes in student loan administration in the coming years, including:

  • major updates to technology, processes and operations to improve user experience and outcomes for students, parents and student loan borrowers;
  • USDS student loan service providers will manage the student loan platforms, contact centers and manual processing activities for student loans;
  • customer service for the Public Service Loan Forgiveness program, TEACH grants, and total and permanent disability (TPD) discharge will be moved to StudentAid.gov and Federal Student Aid’s Business Process Operations providers;
  • USDS student loan servicers will co-brand with Federal Student Aid, including a single sign-on interface for student borrowers with a Federal Student Aid ID;
  • within five years of the go-live date, the FSA will move all account administration, branding and student loan repayments off the USDS student loan service provider websites;
  • Eventually, student loan borrowers will manage their government student loans “through a single FSA-branded interface.”
  • Student loan lenders can then manage all aspects of their federal student loans with Federal Student Aid, including completing the Free Application for Federal Student Aid (FAFSA®) and pay student loans.

They will be able to manage their entire student support experience, from completing the Free application for federal study grants (FAFSA®) form to successfully repay their loans on StudentAid.gov. The education division is focused on simplifying student loan administration and student loan repayments while improving customer service and student loan borrower outcomes. However, the best way to manage your student loans is not to have them. With student loan payments resuming soon, here are some ways to help you pay off student loans faster:


Student Loans: Related Reading

Navient agrees to foreclose $3.5 million in student loans

How to qualify for $17 billion in student loan forgiveness

Bill Maher: Student loan forgiveness is a “loser” problem

Education minister proposes resuming student loan payments

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