This week the Department of Education announced plans that will dramatically alter the student loan borrower experience for federal student loan borrowers. Only time will tell whether or not things will actually improve.
The Official Blog of the Department of Education, announced the following changes to servicing of federal student loans:
- Department of Education-branded communication that is standard–eliminating differences that now exist among multiple servicers that co-brand borrower communications–and that will help borrowers stay on top of their debt and avoid confusion about who is servicing their loan.
- A streamlined borrower experience via a single web portal through which all borrowers can find the latest information about their loans, make payments and apply for benefits–eliminating the need to know the name of their servicer.
- Better customer service practices that will be common for all borrowers and that meet high standards to ensure borrowers’ needs are met consistently, regardless of what contractor is providing that customer service.
- Reduced, and, to the extent practical, eliminated loan transfers and other borrower disruptions that can make it hard for borrowers to keep current with their loan payments and seek help when they need it.
- Enhanced oversight and accountability that will ensure that borrowers are treated fairly and given clear, actionable information at every step of the repayment process, including enhanced customer service practices and a new complaint system to empower borrowers when something is not right.
- A single platform for all Federal student loans allowing for a more seamless connection for future customer service centers.
What will get better?
The immediate improvement will be noticed by borrowers who have loans serviced by multiple providers. If you have to make monthly payments on federal loans at myfedloan, Navient, and Great Lakes; things may be about to improve. All of these federal loans will be serviced at a central department of education website. One payment… all of your federal loans are addressed. This is especially good news for people on income based repayment plans. Instead of having to get things squared away with multiple companies, there should be just one battle to fight and you will be done.
People who have had loans bounce from one servicer to another should be happy about the change as well. In theory, the Department of Education portal will be the final shift in loan servicing. If things go as planned, borrowers won’t have to worry about a constantly moving target. Nothing is more frustrating than loan servicing changing and payments getting missed due to bureaucratic nonsense.
Is the concern with this change?
Federal borrowers are justifiably nervous about this shift. For starters, it means a new website and a new process to deal with. That means potentially learning new procedures and getting adjusted to a new format.
There is also no guarantee that things will get better. Most of the federal loan servicer websites have limitations. Some lack information, while others are not user friendly. Only time will tell how well this new website performs.
There will also be questions about responsibility. What role will loan servicers fill in the new systems? Will they still provide call support? Will there be a clear division of labor? Who is handling the transition?
The Obamacare website was notoriously bad when it was first created. If the same issues happen with the new Department of Education website, it could end up being an expensive problem for borrowers.
The Bottom Line
Things are definitely changing. This is an issue that will have to be closely monitored and borrowers should expect a headache or two along the way. If things go according to plan for the Department of Education, things will get better. Federal borrowers can only help for the best, but would be well served by staying on top of this change and expecting the worst.