NAICU Washington Update

Education Department Takes Step Forward in NextGen Student Loan Servicing

May 27, 2022

In 2017, the Office of Federal Student Aid (FSA) at the Department of Education embarked on an initiative known as the Next Generation Financial Services Environment (Next Gen) to restructure and reimagine student loan servicing. The goal of this initiative is to modernize the FSA’s technology, processes, and operations to improve student, parent, borrower, and institutional experiences and outcomes. 

Now, the Biden Administration is continuing this work by announcing a reframed approach to loan servicing through its solicitation for providers dubbed the Unified Servicing and Data Solution (USDS)

USDS seeks student loan servicers to provide continued servicing capabilities for federal student aid recipients. Specifically, these new servicers would be required to provide the following: 
  • Complete Student Loan Servicing;
  • Student Loan Consolidation Origination and Disbursement;
  • Financial Reporting;
  • Processing of Specialty Claims (discharge, forgiveness, and cancellation); 
  • Complete Fulfillment;
  • Operational Reporting;
  • Compliance Monitoring; and
  • Data Integrations with other FSA Systems.
Applications are due July 19, 2022.  The entire process of reinventing loan servicing is expected to take several more years.

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