• Editor-in-Chief

U.S. Department of Education’s Office of Federal Student Aid Demands Increased Accountability

By: David H.

The U.S. Department of Education’s (Department) office of Federal Student Aid (FSA) announced it signed contracts with five new companies to enhanced customer support to FSA’s more than 68 million student loan customers.

In May of 2020, Navient was one of the nation’s largest student loan servicers overseeing more than 10 million student loan customers and services more than $300 billion of government and private student loans. In October 2018, due to the mishandling of student loan documentation, a lawsuit emerged from members of the American Federation of Teachers. The second-largest teachers union in the U.S. alleged that Navient systematically misdirected borrowers into student loan repayment and forbearance programs when they really should have been directed into the Public Service Loan Forgiveness program.

This action forced the plaintiffs to claim they missed out on payments that could have qualified them for public service loan forgiveness, enabling civil servants to have their federal student loans forgiven after meeting individual requirements.

The teachers alleged that Navient ignored borrowers’ best interests and prevented borrowers from moving to FedLoan (the student loan servicer that administers the Public Service Loan Forgiveness program) so that Navient could continue to service their student loans and earn fees. The plaintiffs claim that they and others like them who wanted to pursue public service loan forgiveness are collectively paying millions of dollars more than they otherwise should in student loan payments.

Navient denied any wrongdoing, and neither Navient nor the American Federation of Teachers has commented publicly on the settlement. However, it is expected that they will pay $1.75 million to fund an independent organization that will educate borrowers on the Public Service Loan Forgiveness program. Each of the ten plaintiffs will receive $15,000. Navient will further train its customer service representatives to listen for keywords related to public service loan forgiveness to connect borrowers with the Public Service Loan Forgiveness program. Navient will also monitor customer service calls to ensure that its representatives are providing accurate information to borrowers interested in public service loan forgiveness. Navient will create standardized templates for borrowers who request information about public service loan forgiveness.

The Public Service Loan Forgiveness Program is a federal program that forgives federal student loans for borrowers, including teachers, who are employed full-time (more than 30 hours per week) in an eligible federal, state or local public service job or 501(c)(3) non-profit job who make 120 available on-time payments.

The five new companies will enhance customer support to FSA’s more than 68 million student loan customers and provide back-office processing support for students, parents, borrowers, and partners at more than 5,800 postsecondary institutions are Edfinancial Services LLC, F.H. Cann & Associates LLC, MAXIMUS Federal Services Inc., Missouri Higher Education Loan Authority (MOHELA), and Texas Guaranteed Student Loan Corporation (Trellis Company) will support customers through direct engagement via contact centers.

U.S. Secretary of Education Betsy DeVos expressed, “This is another major step toward our commitment to improving customer service and holding our contractors accountable for their performance...Students, parents, borrowers, and schools deserve a world-class experience when dealing with FSA, and I’m confident that FSA has hired the companies with the knowledge, experience, and expertise to deliver that.” 

All operations will be supported by centralized loan processing platforms and improved customer experience, including meaningful improvements to FSA’s web presence and outreach capabilities. The contracts signed JUNE 24, 2020, also contain 41 objectives, measurable service-level agreements that hold vendors to high operational performance standards, including ensuring that customers receive comprehensive counseling and resolving issues with just one call or email.

Mark Brown, Chief Operating Officer at Federal Student Aid expressed, “Accountability is non-negotiable when it comes to our contractors and to FSA...these contracts are a vital step forward in providing our students, borrowers, their families, and partners with better experiences with our programs. We also are taking further steps to streamline FSA operations and protect taxpayer dollars.”

Follow us on Twitter today.

#USDepartmentofEducation #contracts #FederalStudentAid #PublicServiceLoanForgivenessProgram #Navient #EdfinancialServicesLLC #FHCannAndAssociatesLLC #MAXIMUSFederalServicesInc #MissouriHigherEducationLoanAuthority #TexasGuaranteedStudentLoanCorporation

Subscribe to Our Newsletter

Follow Us

The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with prior written permission of World Media House LLC.

©2019 by World Media House LLC. All rights reserved.