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Education Department Alters Loan Servicing

May 22, 2017
 
 

The Department of Education announced Friday that it plans to select a single student loan servicer that borrowers will interact with on a single platform, a departure from the current system where four major servicing companies handle borrowers' payments of their federal student loans.

The announcement came just over a month after Secretary of Education Betsy DeVos rescinded guidance from the Obama administration that would have included new protections for borrowers in the next round of servicing contracts.

The Obama guidance had also called for the creation of a single online platform that all borrowers would use to make payments, regardless of which servicer they were assigned. Under the amended solicitation issued by the department, the government would select a single servicer that would use subcontractors to collect student loan payments. In a conference call Friday, department officials said the new system would create efficiencies in oversight by holding the primary servicer accountable.

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