The Department of Education (ED) is taking steps to get a federal loan servicing web portal up and running for borrowers, according to a blog post released yesterday by Under Secretary of Education Ted Mitchell. The Student Aid Bill of Rights issued in March 2015 by President Barack Obama called on ED to “create a new web site by July 1, 2016, to give students and borrowers a simple and straightforward way to file complaints and provide feedback about federal student loan lenders, servicers, collections agencies, and institutions of higher education.”
“We envision a new system where it is easier for borrowers to navigate loan repayment and clear enough to show how the system is performing and where improvements are needed,” wrote Mitchell.
In comments on the proposed centralized student complaint system submitted in early February, NASFAA stressed the need for adequate due process for institutions and solicitation of stakeholder input on the complaint resolution process. While some of those concerns are yet to be addressed, the student loan servicing platform aligns closely with several of the recommendations put forth by NASFAA’s Servicing Issues Task Force.
In its final report, the task force voiced concern about disruptions, inconsistencies, and a lack of quality servicing on federal student loans.
“Borrowers need an accessible ‘one-stop shop’ where they can manage all of their student loans,” the task force wrote in its recommendations. “This should be developed and managed by the Department of Education (ED) and would allow students to easily access all their Direct Loan, Federal Family Education Loan Program (FFELP), and Perkins Loan portfolios in one central place. This would allow borrowers to gain access to information about all of their loans, total indebtedness, and repayment status.”
With the creation of the new system, borrowers will be able to make loan payments in one spot, rather than having to navigate the websites of various loan servicers.
“The financial aid community is pleased to see the Department take meaningful steps to simplify this process for borrowers,” said NASFAA President Justin Draeger. “We look forward to working with ED to continue improving the student borrowing experience.”
The task force also recommended removing servicer branding from communication with borrowers in order to eliminate confusion about the actual holder and servicer of a borrower’s loan. Currently, loan servicers co-brand their own logo with ED’s logo on all correspondence with students, but under ED’s new system, contracted loan servicing companies will have to use ED branding, rather than their own logos, on all communication with student loan borrowers.
“In the coming weeks, as we design the contours of this new system, we want to hear from borrowers, experts, and others about their experiences with student loan repayment and will be identifying opportunities for us to hear from you,” Mitchell wrote in the blog post.
Publication Date: 4/5/2016