Last week, the US Department of Education announced the next steps for an overhaul of the federal student loan administration system, a process that has been underway since 2017. Here’s what you need to know about student loan trends this week and their impact on your balance.
1 current student loan trend for the week of February 28, 2022
1. The Department of Education begins to implement long-term revisions to the Federal Student Loans Service
The US Department of Education is continuing its efforts to change the Federal Student Loans Service, issuing an information request last week indicating that it will begin integrating student loans officers under a new system. of “unified service and data solution” (USDS).
By transitioning the Federal Student Loans Service to this new system, the department hopes to introduce a “more stable, long-term service environment that provides student borrowers with a better experience, holds officers accountable for a high level of performance, and allows the Department of Education to focus on important goals such as reducing delinquency and defaults. »
The overhaul of federal student loan services is part of a larger “Next Gen” initiative the department launched in 2017. Along with integrating new services, the department hopes to:
- Allow borrowers to log in to all service websites using their FSA ID.
- Consolidate access to civil service loan forgiveness, full and permanent disability release, and TEACH grants at a federal student assistance center rather than with specific services.
- Eventually consolidate all account management and student loan repayment into one online federal student aid portal.
How it affects student loans
Student loan servicing has long been a problem for borrowers, with some student loan servicers being publicly criticized for malpractice. With this new system, the Department of Education hopes to address years of dissatisfaction with student loan servicing and improve the tools borrowers use to repay their loans.
The department plans to onboard servicers through the USDS by December 2023, and further enhancements to the Federal Student Aid website will be underway. If you have federal student loans, your loan details will not be affected, but how you handle these loans and the agent you work with may change over the next year. Any such changes will come directly from your current service or Federal Student Aid.
Take away key
The Department of Education will begin onboarding new student loan servicing agents as part of an ongoing effort to overhaul the student loan servicing infrastructure.
Here’s how you can prepare
Whether you’re new to student loans or in the process of repaying, it’s wise to stay informed about how your student loan rates might change. In 2022, more opportunities for cheaper loans or loan forgiveness may open up; keep an eye on the Bankrate student loan news hub for the latest trends.