The Department of Education wants to make student loan payments easier through the launch of a single Web portal for federal student loan borrowers.
The objective behind the new platform is to eliminate varying experiences by offering borrowers with one main point of contact. A rollout date has not been announced. Borrowers currently have to log in to their servicer's website to make payments and some student debtors may have loans with multiple servicers.
Great Lakes Educational Loan Services, Nelnet, FedLoan Servicing and Navient, a spinoff of Sallie Mae, are the big four servicers and they service the majority of student loan borrowers, according to the Student Loan Borrower Assistance Project, a division of the Boston-based National Consumer Law Center.
The servicers collect money from borrowers and remit the payments to the Education Department, which ultimately remits those funds to the Department of Treasury.
"Our goal is to build a new state-of-the-art loan servicing system – one that creates incentives and guidelines that support a more user-friendly single online loan management platform," said Under Secretary of Education Ted Mitchell.
According to the Education Department's blog, borrowers can expect department-branded communication, which will eliminate differences between servicers.
Total outstanding student loan debt is roughly $1.3 trillion. Most of that debt stems from federal student loans.The Education Department previously had a single direct loan servicer until 2009 when it changed to the current structure.
The Consumer Financial Protection Bureau, which oversees consumer borrowing, last summer received more than 8,000 comments from borrowers about loan servicing providers. The Education Department and the Treasury incorporated this feedback into their road map – the Financial Aid Servicing Solution – to improve services to borrowers. In the feedback, commenters said servicing transfers resulted in surprise fees and damaged credit, to name a few problems, according to the CFPB's September 2015 report.
