Education Department continues overhaul of student loan servicing, and other current student loan news for the week of Feb. 28, 2022
The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for .
Last week, the U.S. Department of Education announced next steps in an overhaul of the federal student loan servicing system, a process that has been ongoing since 2017. Here’s what you need to know about this week’s student loans trends and how they could impact your balance.
1 current trend within student loans for the week of Feb. 28, 2022
1. Education Department begins implementing long-term revisions to federal student loan servicing
The U.S. Department of Education is continuing its push for federal student loan servicing changes, last week publishing a Request for Information indicating that it will begin onboarding student loan servicers under a new “Unified Servicing and Data Solution” (USDS) system.
By transitioning federal student loan servicing to this new system, the department hopes to introduce a “more stable, long-term servicing environment that provides student loan borrowers a better experience, holds servicers accountable to a high level of performance and allows the Department of Education to focus on important objectives like reducing delinquency and default.”
The overhaul to federal student loan servicers is part of a larger “Next Gen” initiative that the department introduced in 2017. Along with onboarding new servicers, the department hopes to:
- Allow borrowers to log into all servicer websites using their FSA ID.
- Consolidate access to Public Service Loan Forgiveness, total and permanent disability discharge and TEACH grants into one Federal Student Aid hub rather than with specific servicers.
- Eventually consolidate all account management and student loan repayment into one Federal Student Aid online portal.
How this affects student loans
Student loan servicing has long been a pain point for borrowers, with some student loan servicers publicly coming under fire for lending malpractice. Through this new system, the Education Department hopes to amend years of dissatisfaction with student loan servicing and improve the tools that borrowers use to repay their loans.
The department plans to onboard servicers through USDS by December 2023, and other improvements to the Federal Student Aid website will be ongoing. If you do have federal student loans, your loan details won’t be impacted — but the way you manage those loans, and the servicer you work with, could change over the next year. Any changes along these lines will come directly from your current servicer or from Federal Student Aid.
Here’s how you can get prepared
Whether you’re new to student loans or well into repayment, it’s wise to stay informed about how your student loan rates could change. During 2022, more opportunities for cheaper loans or loan forgiveness could open up; keep an eye on the Bankrate student loans news hub for the latest trends.