Education Dept. Keeps Obama Plan to Streamline Loan System

By: Stacy Cowley - The New York Times

The Education Department on Friday took up an Obama-era plan to streamline federal student loan servicing by moving to a new, single platform for managing the loans of 43 million borrowers.

The department had indicated it might jettison the previous administration’s initiative, which was intended to simplify a system that consumer advocates have complained is overly complex and rife with poor customer service.

Choosing a single vendor to manage the loans also carries risk, as that entity would construct the most visible online government portal since the Affordable Care Act program website, HealthCare.gov.

One of the three remaining bidders for the contract is Navient, which was sued this year by the Consumer Financial Protection Bureau and two state attorneys general. The lawsuits claim Navient, the nation’s largest student-loan servicer, made serious mistakes at nearly every step of the collections process, which illegally drove up loan repayment costs for millions of borrowers. Navient denied any wrongdoing and is fighting the lawsuits.