A New Vision for Serving Student Loan Borrowers

For Sarah, streamlining student loan repayment for easy access to affordable repayment plans is critical. Sarah teaches second grade in Minnesota, and works to ensure that all her students have hope for their futures and “know that the possibilities are endless for them.” After paying her monthly loan balance, she lives paycheck-to-paycheck. Public service loan forgiveness options are available to help make debt more manageable and affordable, but many teachers like Sarah struggle to learn about whether or not they qualify. The Obama Administration knows that families across the country are working hard to pay off their loans. This Administration wants to ensure that students do not have to choose between a job that serves their communities and paying their debt, and that borrowers like Sarah do not struggle to navigate student loan repayment. That’s why the US Department of Education is taking steps to reinvent customer service for federal student loan borrowers to ensure that every borrower has the right to an affordable repayment plan like Pay As You Earn (PAYE), quality customer service, reliable information, and fair treatment as they repay their loans – objectives the President put forward in his Student Aid Bill of Rights.

Since the President’s announcement, the Department has worked in partnership with the U.S. Department of the Treasury and the Consumer Financial Protection Bureau, as well as with students, colleges and universities, higher education and loan experts to identify and incorporate best practices for supporting the more than 40 million Americans with student loans. We’ve moved to identify and protect federal student loan borrowers who may be eligible to have their loans forgiven under the Total and Permanent Disability loan discharge program. Last October, we released a report outlining a series of statutory, regulatory, and administrative recommendations to safeguard student borrowers. In December, we announced the results of a pilot program intended to reach and provide assistance to seriously delinquent borrowers. We also published new quarterly data updates on Private Collection Agency performance and implemented a new set of student loan statement disclosures to provide clear and direct information to borrowers. And while the majority of federal student loan borrowers continue to successfully repay their student loans, there are still too many borrowers who are struggling, or who may be at risk of defaulting on their loans, and the Department is focused on making sure they are well-supported in repayment.

Today, we’re launching one of our biggest initiatives to date to make sure all borrowers are getting the customer service they deserve, by challenging the industry to compete to provide world-class service to our Direct Loan borrowers. Six years ago, the President signed into law the landmark student loan reform legislation that shifted $60 billion in subsidies that would have been paid to banks and lenders and instead made historic investments to help millions of American families pay for college and allow student loan borrowers to access consistent, high-quality loan servicing in the future. Under the old system, banks and lenders were paid to make loans and the Department had little flexibility to ensure that borrowers were getting quality servicing and fair treatment. Now that the Department is both the lender and the servicer, the Department is able to better address any challenges facing borrowers, manage the student loan portfolio, and continuously work to strengthen the borrower experience.

Currently, the US Department of Education has contracts with a number of companies that manage the student loan repayment process. Some are strong at developing state-of-the-art data management systems, and others are pros at reaching out to borrowers and helping them when they’re in trouble. Right now, all servicers have to do everything – not just what they’re good at. This year, 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 with high-quality, one-on-one customer service that provides the help and guidance borrowers need when they have questions or their circumstances change.

We envision a new system where it is easier for borrowers to navigate loan repayment and clear enough to show how the system is performing and where improvements are needed. In our new customer service model, borrowers and taxpayers can expect:

  • 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.

This system will lay the foundation for forthcoming contract actions to acquire additional customer service centers.

In the coming weeks, as we design the contours of this new system, we want to hear from borrowers, experts, and others about their experiences with student loan repayment and will be identifying opportunities for us to hear from you. Stay tuned.

Ted Mitchell is U.S. Under Secretary of Education.


  1. There are some very poorly researched comments here, and a lot of emotion. This is not an issue of whether the student is irresponsible, or weather the government is complacent. The real issue is there is gap in education in america. The government tried to help by opening the student loan system, then greedy businesses took over and used whatever tactic necessary to entice unsuspecting people into loans that they could not repay.

    Then, to add insult to injury, even if they graduate, their degrees are not worth the paper they are printed on. So they cannot get the jobs they where told they could get.

    Who is responsible for this, well lets stop blaming the student, they just tried to do better and pay more taxes.

    Please keep in mind that not all people in our great nation had the luxury of good parenting, so not everyone out there knows how to manage their finances. That’s one of the things they where looking at college for (since it is not taught in public schools).

    Minorities, particularly Hispanics, are in a severe disadvantage. This is particularly true in today’s environment where Hispanics are being demonized and villainzed. Not all Hispanics are illegal or naturalized, some are natural born american citizens and yet they too in many cases had bad parenting.

    Instead passing blame, lets fix the problem. Unfortunately whether we like it or not we the tax payer will have to shoulder the burden for failed policies that are not restricted to the current administration and go back across party lines.

    There are some folks that should have their loans discharged in bankruptcy court. Those that have undergraduate loans and degrees that are worthless and can show that even after graduation it has not benefited them at all.

    I do not believe in discharge for those with graduate degrees, but undergraduate degrees and their loans should be dis-chargeable.

    This will hurt in the short run, but may help in the long run. a few years after (and some counseling) and these folks could be good borrowers buying houses and cars which spur the economy.

    Bottom line, all these schemes are not going to do much other than continue to increase the interest attached to those loans. We cannot squeeze blood from a rock. Some of us just don’t have the resources, or the prospects.

  2. EDMC aka The Art Institute…committed fraud of epic proportions and the innocent should be discharged. The Department of Education was not the watchdog for the student. When will DOE release us? When? A new website is for new
    Fed loan students. Many American’s lives are on hold. …

  3. I have a better plan. it’s called figure out how much your degree is going to cost and how much you are likely to earn when you get it. If the numbers don’t warrant the degree, get another degree. But no, Obama would rather abdicate any personal responsibility from students. Wonder how financially responsible they will be if they ever grow up?

  4. As a borrow I feel like the servicer of my loans (FedLoan) is failing to follow the Departments objectives and desires. They have had over 4 months to process a switch from the Income Based repayment plan to the REPAYE (Revised Pay as You Earn) and have failed to effectively administer the guidelines. We hear terrible excuses blaming “the SYSTEM” and hearing things like “it is being PROCESSED”, and “we will put in the system for it to be EXPEDITED”, all the while borrower are left blowing in the wind and having no faith our payments, or amounts are those promised by the programs that are promoted by the Department of Education.

  5. I have little faith in the Department of Education to do the right thing. The truth is, the DoED has been complicit in the slow-moving US college meltdown. They continue to drag their feet in debt relief for people who were deceived and defrauded by for-profit colleges. And they are ignoring much larger structural issues that will disproportionately affect working class people attending HBCUs, tribal colleges, and community colleges.

  6. Better customer service? Stop funding for-profit loan mills such as EDMC and University of Phoenix. They have abysmal graduation, retention, and gainful employment records, besides being expensive. Just look at collegescorecard.edu.gov. DoE almost single handedly aides and abets this failed business model and continues to be the the primary player in financially ruining hundreds of thousands of students, investors and all taxpayers. Until you show some backbone and stop talking out of both sides of your collective mouths, I will continue to follow your efforts to prove your societal worth towards the democratization of higher education with a grain of salt. Unfortunately, so far, it has been more akin to the democratization of hopelessness and poverty. What’s stopping you?

  7. I really want to believe that these well intentioned ideas will come into being, however, seeing is believing. I’ve had so many issues with navigating student loan repayment in the past and just wonder how all of these things will take shape. Like right now, recertifying my IBR plan is challenging – I need to use my 2015 tax info now (because we filed differently this year so I can get an affordable payment for once…. and this is another story), but can’t because it hasn’t switched over from 2014 tax year…. this is just one example.

  8. Very cool! Maybe now I’ll live long enough to get the student and PLUS loans paid off for the twins.

  9. Thank you for this information. These sound like very welcome changes. When my federal student loans were transferred from one servicer to another, I was not informed of the change. Because I check my loan account online frequently, I was able to notice that my balance had disappeared from my account with my first servicer, and I found out who my new servicer was via the NSLDS. As a result, I was able to send my next payment (for which i had been billed by the previous servicer) just on time to my new servicer (which was initially not credited until asked my credit union for a copy of the canceled check). I have no idea what would have happened if I had not taken the initiative to make this payment, but I felt that communication was sorely lacking. This is just one example of how much borrowers have to stay on top of their loan servicers to prevent payment delays and other problems (such as being placed on the wrong repayment plan, which has happened to me and from what I have heard is not uncommon). I am hopeful that the proposed reforms will improve customer service for student loan borrowers.

  10. Wonderful news. Hopefully the efforts reach the banks who offer private student loans….they don’t require a cosigner to take out a loan but to consolidate they require it…..they put more people then borrrows at risk..they have faulty computer systems….they don’t seem to use the postal service efficiently….for example …I have a private loan through Wells Fargo…when I took it out as a graduate student I added it was one loan….when I inquire about loan it has turned into 3 separate loans…yet they mail me one envelope via postal service with 2 separate payment request forms ….each form with a different amount to pay and only 1 account number…I call to ask which loan I was paying since there were no identifying numbers to indicate it being a different loan….I am told it doesn’t matter the money will be spread over the 3 loans……so I ask to consolidate they tell me I can not unless I have a cosigner……..they make it difficult and profit off their inefficiencies…… I now tell students to stay away from private student loans and go federal …..

  11. The existence of income based repayment and loan forgiveness plans indicates what I believe is a fundamental flaw in awarding and financial advising policy. Instead of capping borrowing to what we’re willing to risk, or what we’d expect someone to repay, we’ve essentially said “Go ahead and borrow as much as you need, take as many chances as it takes and get as many degrees as you want on our dime” and are rewarding irrational economic decisions. The President’s revised pay as you earn plan is a step in the right direction, but doesn’t go far enough towards ensuring taxpayers are not writing blank checks for any and all degrees in perpetuity. I work in higher education and can state first hand that financial distress is fairly predictable. Preventing it with responsible borrowing takes hard caps, someone saying “no more”, not mere suggestion. This goes for adult learners as much as millennials.

  12. So basically, all you guys are doing is creating a new consolidated website/portal for student loans.

    Thats it?

    Do you guys think that we (read: millennials) are stupid? How does this do anything to help the current student loan bubble?

    Here’s a rather sober analogy. Lets say you’re a prisoner at a labor camp, and have to complete a certain amount of labor to be freed (loan debt). If you don’t complete a certain amount of labor per day, it’s added on to your jail sentence (interest).

    Once day, the guards come over to you and say “hey, you can work less each day, but we’re going to stretch your jail sentence to 20+ years” (PAYE). But if you have extra work left you didn’t finish at the end of the 20 years, you’re going to have to do it all at once, without sleep (tax bomb at the end of PAYE – oftentimes more than the original amount.

    Fast toward to today – the jail guard (you guys + this website) have announced “we’re going to keep you at just one labor camp, and not move you around (multiple loans, different websites) to make it easier for you to preform your labor!

    Do you expect us to be GLAD? We still have to pay off the loans regardless. Most millennials are technologically savvy – making a new consolidated website/portal does absolutely NOTHING to help us long term.

    I’m calling you guys out – seeing articles like this is absolutely infuriating.

    • I do not understand who would you expect to pay the loans you took. It was a decision you made and a commitment you signed for.

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