U.S. Department of Education’s Office of Federal Student Aid Announces New Contracts with Five Companies to Improve Customer Service, Increase Accountability

Today, the U.S. Department of Education’s (Department) office of Federal Student Aid (FSA) announced it has signed contracts with five companies to provide enhanced customer support to FSA’s more than 68 million student loan customers. Edfinancial Services LLC, F.H. Cann & Associates LLC, MAXIMUS Federal Services Inc., Missouri Higher Education Loan Authority (MOHELA), and Texas Guaranteed Student Loan Corporation (Trellis Company) will support customers through direct engagement via contact centers and provide back-office processing support for students, parents, borrowers and partners at more than 5,800 postsecondary institutions.

“This is another major step toward our commitment to improving customer service and holding our contractors accountable for their performance,” said U.S. Secretary of Education Betsy DeVos. “Students, parents, borrowers, and schools deserve a world-class experience when dealing with FSA, and I’m confident that FSA has hired the companies with the knowledge, experience and expertise to deliver that.”

The five companies that received contracts today through the Next Gen Business Process Operations (BPO) solicitation will correspond with customers and partners via phone, chat, social media, postal mail, and email and will support the back-office processing that is associated with those contacts. All of these operations will be supported by a centralized loan processing platform and an improved customer experience, including meaningful improvements to FSA’s web presence and outreach capabilities.

As part of the new loan servicing environment, FSA will provide comprehensive contact center training and oversight, ensuring that agents have up-to-date knowledge of federal student aid programs to give customers the right answer in every interaction. The contracts signed today also contain 41 objective, measurable service-level agreements that hold vendors to high operational performance standards, including ensuring that customers receive comprehensive counseling and resolution of issues with just one call or email.

“Accountability is non-negotiable when it comes to our contractors and to FSA,” said Mark Brown, chief operating officer at Federal Student Aid. “These contracts are a vital step forward in providing our students, borrowers, their families, and partners with better experiences with our programs. We also are taking further steps to streamline FSA operations and protect taxpayer dollars.”

FSA will also begin working with the new vendors immediately to ensure their systems meet the department’s rigorous cybersecurity standards. As these five vendors come online, they will begin managing non-servicing work, then take on servicing-related activities.

The current loan servicing environment, which Next Gen will replace, features nine different servicers operating on four different platforms, which can lead to customer confusion and inconsistent operations for the federal student loan programs. During repayment, borrowers are assigned to a loan servicer and engage directly with that servicer’s website, which may feature completely different tools, interfaces, branding, and consumer information from another loan servicer’s website. Current loan servicing contracts also allow wide latitude in how servicers manage accounts, including staffing their own contact centers, crafting borrower outreach campaigns, and training customer service representatives.

Furthermore, today’s loan servicing environment does not require maximum accountability. The legacy servicing contracts do not contain adequate incentives to reward servicers when they manage borrowers’ accounts successfully, and they do not allow for the appropriate consequences to be applied to loan servicers that fail to meet contract requirements.

As the Next Gen FSA initiative seeks to solve these challenges, the vision is for all customers with federally managed loans to seamlessly repay through StudentAid.gov, where customers can receive a consistent set of tools and information that are personalized to their unique circumstances.