The Consumer Financial Protection Bureau and the Department of Education have worked for several years to make student loan servicing easier and more convenient for borrowers. The two agencies collected complaints and suggestions from borrowers and used these as a starting point for loan servicing reform. The results of this reform have now been released.
The biggest change is that borrowers will no longer have to deal with multiple loan servicers. Instead, a single servicer will handle all federal student loans. At least, that is how it will appear to borrowers. Multiple servicers will still exist behind the scenes to handle the huge volume of student loans, but borrowers will only have to deal with one entity.
This means that borrowers will no longer need to know who is servicing their loans or how to contact them. Everything will go through one web portal, and all servicers will follow the same standardized practices and guidelines. Even if one servicer purchases a loan from another, everything will continue to be done in the same way for the borrower.
Other changes include making the system more transparent, and providing more incentive for servicers to help borrowers who are in danger of defaulting on their loans. Trained loan professionals will work with these individuals, teaching them about income-based repayment plans and other options.
Currently, there is no date for when these changes will be implemented.
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