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Education Department to Reform Student Loan Servicing System

May 23, 2022

The Education Department’s Office of Federal Student Aid announced a new plan Thursday to reform the student loan servicing system that oversees the 35 million borrowers with federal student loans. The plan, called the Unified Servicing and Data Solution (USDS), aims to simplify access to student loan servicers and increase transparency between FSA, borrowers and loan servicers, which have long been issues that complicate the student loan servicing process.

Since 2016, FSA has attempted to restructure the student loan servicing experience. Servicers are the main source that provides information to borrowers on how to apply for aid, enroll in repayment plans and find information on loan status. The six loan servicers that contract with the federal government each operate their own websites, making access to this information complicated.

USDS aims to simplify this process by streamlining access to all student loan servicers with federal contracts through the FSA-managed Additionally, FSA will increase accountability measures to ensure student loan servicers are providing adequate customer service to borrowers by implementing new reporting metrics.

FSA is currently evaluating proposals with loan servicers to implement the goals laid out in USDS. These proposals will be implemented in the new servicing contracts between FSA and loan servicers, which are set to expire in December 2023.

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