FSA: Loan servicers must hit 4 big goals starting in January to help borrowers
Six student loan servicing companies will be more closely monitored by the Federal Student Aid office and must meet new standards that assist borrowers whose loans will reset in January, the U.S. Department of Education announced on Friday.
Beginning early next year, Great Lakes, HESC/Edfinancial, MOHELA, Navient, Nelnet, and OSLA Servicing will be rewarded for their ability to reach out and help customers in need, particularly those who have defaulted or are behind on their payments. Those that don’t comply may be penalized and have loan privileges or new borrowers rescinded. Servicers also must sign extended contracts that prevent them from skirting lawsuits over “poor servicing practices.”
“FSA is raising the bar for the level of service student loan borrowers will receive,” said Richard Cordray, Chief Operating Officer of the FSA. “Our actions come at a critical time as we help borrowers prepare for loan payments to resume early next year. The great work done by our negotiating team here enables us to ensure that loan servicers meet the tougher standards or face consequences.”
All of the servicers have agreed to extended contracts with the FSA until December 2023 under the Consolidated Appropriations Act. Navient is awaiting word on its move to Maximus from the Department. FedLoan Servicing (PHEAA) and Granite State decided recently to opt out of federal loan servicing.
In addition to earning points for keeping borrowers in loan programs and on pace to pay off loans, FSA has set out four strategic targets that servicers must meet:
- The percentage of borrowers who cut a phone call short before reaching a customer service representative
- Whether representatives fully answer questions and discuss repayment options coherently
- The efficiency of meeting a borrower’s first request for help
- How well customer service performs in assisting borrowers overall
On Jan. 31, 2022, servicers also will be required to expand their “core call center hours” through Saturdays and at times that are convenient to customers, as well as provide more Spanish-speaking representatives.
The FSA, meanwhile, will be for the first time tracking the processes from when borrowers first sign on for loans through their experiences in making payments, calls and ultimately completing terms of agreement. Among the details that will be looked at by the FSA will be “how long it takes for servicers to process various applications (loan forgiveness, deferments, and income-driven repayment), which borrower applications are denied, and what complaints borrowers log directly with servicers.”
The FSA said it will in the future provide data and metrics as to the efficiency and willingness of services to offer sound customer service.
“Throughout the next year, FSA will take additional steps to implement a broader vision focused on ensuring borrowers have easy access to the clear, accurate, and timely information they need to manage their federal student loans,” ED said in a statement. “The Department also will work to standardize borrower data, simplify the process to transfer borrowers from one servicer to another, and improve security and privacy across our systems. Most importantly, we will work to provide borrowers with a superior customer experience and a suite of tools to ensure they have the resources necessary to manage their student loans successfully.”