U.S. Secretary of Education Betsy DeVos announced May 19 that the Department of Education (DOE) formally amended Phase II of the federal student loan servicing solicitation. The DOE will select a single student loan servicer that borrowers will interact with on a single platform.
This is a departure from the current system, where four major servicing companies handled borrowers’ payments on their federal student loans.
“From day one, my priority as Secretary of Education has been to put students’ needs first,” DeVos said in a prepared statement. “This amended solicitation does just that. It maintains superior customer service and borrower protections while increasing oversight and protecting taxpayers.”
DeVos called the previous federal student loan servicing solicitation cumbersome and confusing.
“With changes in the new amendment, we have simplified the process to ensure meaningful borrower protections while saving taxpayers more than $130 million over the next five years,” DeVos added. “Savings are expected to increase significantly over the life of the contract. Borrowers can expect to see a more user-friendly loan servicing interface, shorter email and call response times and an improved payment application method that will maximize the benefit of each payment the borrower makes. Our amendment makes no changes to repayment plan requirements.”
This is the ninth amendment to Phase II of the DOE federal student loan servicing solicitation. According to a fact sheet released by the DOE, the amendment “ensures superior customer service and borrower protections while saving taxpayers money and increasing oversight.”
The amended solicitation includes all of the borrower protections recommended by federal oversight agencies and integrates “a unified branding across the loan servicing platform to reduce customer confusion; upgrades the payment application method to automatically maximize the benefit of each overpayment and underpayment for the borrower; [and] requires consistent and accurate responses to emails, calls, application requests and many other servicing activities.”
The amended solicitation changes government oversight, according to the fact sheet, “by simplifying the contracting structure and ensuring all vendors adhere to the same rules: Allows Federal Student Aid (FSA) to monitor one servicer instead of all nine servicers; allows FSA to prioritize its monitoring efforts and better ensure that borrowers are receiving the high-quality customer service they deserve.”
Cover Story: