Democratic Senators Request Information on ED's Student Loan Contracts

By Brittany Hackett, Communications Staff

Senate Democrats are taking a closer look at how the Department of Education awards contracts for the servicing of student loans, requesting documentation and information about the process in a letter sent to Secretary Arne Duncan last week.

Nine Senate Democrats including Subcommittee on Financial Contracting and Oversight Chair Claire McCaskill signed the July 8 letter. In the letter, the signatories said they were “deeply concerned” that ED’s recent extension of the existing Title IV Additional Servicers (TIVAS) contracts could “undermine the President’s efforts” to renegotiate the terms of those contracts to achieve better service for federal student loan borrowers. 

“To achieve President Obama’s goals, the Department of Education must use all of its leverage to negotiate strong consumer protections and performance standards that include real consequences for noncompliance,” the senators wrote in the letter.

The senators requested that ED provide them with several pieces of information, which includes, among others:

  • A list of all contractors involved with administering student loans and the final contracts and all modifications awarded for servicing loans under the Federal Direct program; 
  • All Independent Government Cost Estimates conducted by ED related to the servicing contracts for the Direct loan program;
  • Performance reports, conducted by either ED or contractors, for the current student loan servicing contactors;
  • Information regarding ED’s planning for future loan servicing contracts; and 
  • The portion of non-defaulted loans serviced by each of the TIVAS contractors that fall into several categories, including in-school deferment, administrative forbearance, active repayment in various plans.

The senators also expressed specific concern with ED’s decisions to continue its contract with Navient (formerly Sallie Mae’s federal loan servicing division), writing that the decisions “may have failed to adequately consider current investigations into Sallie Mae/Navient’s loan practices.” They are requesting ED provide information on how it plans to address Navient’s contracts during the investigation of the company.

The senators have asked that the requested information and any supporting documents be provided no later than July 29. They also requested that ED offer a briefing to the Senate staff on this information by no later than August 8.


Publication Date: 7/15/2014

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