Ministry of Education to reform student loan servicing system
Department of Education Office of Federal Student Aid announced a new plan on Thursday reform the student loan administration system that oversees the 35 million borrowers with federal student loans. The plan, called Unified Servicing and Data Solution (USDS), aims to simplify access to student loan servicers and increase transparency between the FSA, borrowers and loan servicers, which have long been issues that complicate the student loan management process.
Since 2016, the FSA has attempted to restructure the student loan servicing experience. Service agents are the primary source for providing information to borrowers on how to apply for assistance, enroll in repayment plans, and find loan status information. The six loan servicers that contract with the federal government each operate their own websites, making it difficult to access this information.
The USDS aims to simplify this process by streamlining access to all student loan servicers with federal contracts through StudentAid.gov, operated by the FSA. Additionally, the FSA will increase accountability measures to ensure that student loan servicers provide adequate customer service to borrowers by implementing new reporting measures.
The FSA is currently evaluating proposals with loan servicers to implement the objectives set out in the USDS. These proposals will be implemented in new service contracts between the FSA and loan servicers, which are due to expire in December 2023.