Amidst a growing uproar from student loan borrowers and advocates about the dismal state of federal student loan servicing, the U.S. Dept. of Education has announced that it intends on creating a centralized web portal that will allow borrowers to make payments on their federal student loans – effectively bypassing third-party contracted loan servicing companies such as Navient, NelNet, FedLoan Servicing/PHEAA, and Great Lakes Higher Education.
A recent report published by Bloomberg News revealed that the U.S. Dept. of Education paid $576 million in fees to its contracted loan servicers, just in the last fiscal year. The Department said that it expects to pay its loan servicers a whopping $804 million this year. Despite these massive payments (your tax dollars at work), many borrowers encounter serious problems with their loan servicers including lost documents and payments, improper calculations of monthly payments, misapplied payments, and poor record keeping. I consistently see these types of problems as a student loan lawyer.
While few details about this new payment system have been released, a U.S. Dept. of Education spokesperson said that the administration is working to “implement a single Department of Education student loan portal for all borrowers … hoping to make things clearer, simpler and less confusing for every borrower.” No word on a specific timeframe for the program’s rollout.
Will this new program help borrowers repay their student loans and avoid servicing problems? Time will tell. Stay tuned – let’s see if they can even get this system up and running.
Source: The Huffington Post.