NAICU Washington Update

Department of Education Increases Oversight of Federal Student Loan Servicers

October 22, 2021

Beginning early next year, the Department of Education will increase the oversight of a half-dozen federal student loan servicers.  Focused on protecting borrowers, the Office of Federal Student Aid (FSA) will be monitoring and assessing the Great Lakes, HESC/Edfinancial, MOHELA, Navient, Nelnet, and OSLA Servicing loan service providers. 

This increased oversight will include stronger standards for performance, transparency, and accountability. The Department will also have a greater ability to monitor and address servicing issues as they arise, require compliance with federal, state, and local laws relating to loan servicing, and hold servicers accountable for their performance, especially as it relates to the transition period after the student loan repayment pause ends on January 31, 2022. 

The FSA has the authority to extend student loan servicer contracts for an additional two years, and all of the aforementioned servicers, except for Navient, have had their contracts extended until December 2023. Navient is currently being reviewed as the organization has submitted a request to transfer its contract to Maximus. The contracts for FedLoan Servicing, which was established by the Pennsylvania Higher Education Assistance Agency, and Granite State were not extended since both companies have announced plans to stop servicing federal student loans, which FSA is in the process of transferring to remaining service providers.

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