Federal Student Loans Servicing Given a Boost by U.S. Department of Education


President Obama recently took executive action to make student loans more affordable. The U.S. Department of Education followed suit announcing that they are taking new steps to help federal student loan borrowers when it comes to managing their debt.

The U.S. Department of Education has begun to renegotiate the terms of its current contracts with many of the federal student loan services in the hopes that it will support new incentives. The goal for these new incentives is to provide students with better customer service and to help the loan holders to stay current on their loan payments.

 The result of this action will be two fold. It will help to ensure that loan holders receive the highest quality support possible while they are in the process of paying their loans back and it will also help the Department to monitor how the lenders are performing. Continued improvement of services will hopefully be a given by this point as well.

Secretary of Education Arne Duncan has directed Under Secretary Ted Mitchell with the task of exploring other actions that can be taken by the Department as well. If there are any other possible actions that can be taken to increase the strength in the federal direct loan program, the Department wants to find it and act accordingly.

Over the next several weeks we can expect to see some announcements from Mitchell and the Department’s Office of Federal Student Aid. These upcoming statements will be direct results of the feedback that was received from student loan holders and stakeholders in regards to what they feel will improve the federal student loan program.

The Department will also begin to amend process for the regulations in place currently. Students will also soon be able to cap the payments they intend to make at 10% of the monthly income earned. This will fall under an enhanced version of the “Pay As You Earn” payment plan option. This is a very good thing for student debt and will decrease the amount of loan that go into default.

Source:
U.S. Department of Education Strengthens Federal Student Loan Servicing. (2014, August 29). Retrieved September 19, 2014, from http://www.ed.gov/news/press-releases/us-department-education-strengthens-federal-student-loan-servicing

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