Student Loan Servicers To Be Scrutinized By Task Force

"The National Association of Student Financial Aid Administrators—NASFAA-- announced yesterday that it is teaming up with the National Direct Student Loan Coalition--NDSLC--on a joint task force that could put new pressure on student loan servicers to improve the repayment process," MainStreet reports

"The Big Four servicers include Sallie Mae, The Pennsylvania Higher Education Assistance Agency, the Great Lakes Higher Education Corporation and NelNet.

The task force will focus on current servicing practices and make recommendations to the Department of Education's Office of Federal Student Aid. ...

'Over the last several years, financial aid administrators have voiced concern about disruptions, inconsistencies and lack of quality servicing on federal student loans,' said NASFAA President Justin Draeger. 'However, it has been difficult to fully grasp the extent to which servicing problems exist, how widespread they might be, and how servicing practices may differ between various providers. This task force aims to more closely examine and report on these challenges.'

'As national cohort default rates and student debt rise, it is important that students who want to make their loan payments can do that,' added NDSLC Chair Chuck Knepfle. 'This task force will help identify and recommend ways to improve communications and offer more effective repayment options to borrowers.' …

The task force will serve in an ongoing advisory capacity to NASFAA and the NDSLC. Two specific outcomes expected in early 2015 include:

  • A disclosure report that clearly shows different operational practices between various servicers.
  • A report to be delivered to the Department of Education and other relevant agencies containing recommendations for improving federal student loan servicing, indicating areas of deficiency in loan servicing and proposed solutions."
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