The U.S. Education Department last week announced significant changes in the array of providers it uses to service federal student loans, and the flurry of changes are likely to reinforce concerns among some student loan borrowers about how they and their loans are treated by the servicers (especially when their loans are split among multiple servicers).
The announcement from the department on Friday expanded on an earlier announcement about the agency's plan to phase out the involvement of ACS (which is owned by Xerox) from its student loan servicing team, and the addition of Nelnet. The statement, aimed at financial aid officers, also notes that the technology platform used by four nonprofit loan servicers is being discontinued, and that loans held by those servicers will be transferred to two other nonprofit service providers.
A ProPublica report last year documented the difficulties that some borrowers had encountered from having their loans randomly assigned to servicers (and in some cases multiple ones), including inconsistent or changing information about how much they owe, payment plans, etc.
The Consumer Financial Protection Bureau said in March that it would extend its oversight to student loan servicers.
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- Consumer Financial Protection Bureau to seek oversight of loan servicers
- Education Department official defends agency's loan servicing contracts
- Education Department plans to change how it oversees loan servicers
- Lenders' Last-Ditch Gambit
- New Targets in Loan Inquiry
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