Student Debt                   


These House Lawmakers Are No Fans of a New Student Loan Proposal

A key pair of House Republicans has no faith in the Department of Education's ability to create the new state-of-the-art federal student loan servicing system it announced earlier this year.

"We have no confidence in the department's ability to complete this project without delay, service interruptions and harm to borrowers," Rep. John King of Minnesota, chairman of the House education committee, and Rep. Virginia Foxx or North Carolina, wrote in a letter Monday to Education Secretary John King.
A man looks at the door of an office offering financial aid services.
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A press release from Kline also blasted the plan, calling it a "half-baked idea" that will not fix the problems that have long plagued loan servicers.

A number of companies manage federal student loan repayments for the Department of Education, and some of them are notorious for providing poor customer service to borrowers.

As a result, the department announced earlier this year a plan to build a new loan servicing system that borrowers can tap into when they have questions. The department has billed it as a user-friendly platform with "high-quality, one-on-one customer service."

But the proposal has its critics, including members of the House GOP, who contend that the department's deficiencies in managing service providers portend its inability to seamlessly pull off the creation of a new online servicing system.

"Members of Congress have called for a common manual for servicers to address the concerns the department cites as reasons for the 'single servicing solution,'" Kline and Foxx wrote. "However, the department has rejected these calls, and instead, it is moving forward with an initiative that lacks the necessary details to determine whether a project of this magnitude is even feasible."

For the department's part, James Runcie, chief operating officer of the Federal Student Aid office, has emphasized in recent congressional testimony that the enormous task of taking over the entire federal student loan system in 2010 was an enormous task – one that, all things considered, was largely successful.
FILE - In this Sept. 21, 2015 file photo, a student works on her laptop on the campus of the University of New Mexico near a statue of the school's mascot, the Lobo, in Albuquerque. Efforts to make college more accessible in New Mexico and a handful of other states by tapping lottery proceeds are in jeopardy as tuition rises, state budgets falter and ticket sales slump. Tens of thousands of students in New Mexico could see their tuition assistance slashed by 30 percent in 2017 if nothing is done. (AP Photo/Russell Contreras, File)
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The focus has always been, he's said, on ensuring students have access to the funding necessary to enroll in college.

In the letter, Kline and Foxx cite reports from the nonpartisan Government Accountability Office that documented poor customer service that exists among loan management companies the Education Department uses and highlighted that borrowers have faced delays in having defaults removed from their credit reports.

The two lawmakers requested a briefing for committee staffers to learn more details about the proposal, as well as "the expected benefits and the plan in place to avoid the pitfalls of previous contracting issues."

An Education Department spokeswoman declined to comment on the letter, and referred to Runcie's testimony.