The U.S. Department of Education will offer a contract to a single loan servicer to manage its $1.2 trillion student loan portfolio, which contains over 43 million borrowers. Instead of keeping its current contract with four different services, the ED will award Navient, GreatNet or the Pennsylvania Higher Education Assistance Agency (PHEAA) the contract. What exactly does this mean for borrowers?
With the change, service providers would no longer be required to provide information in Spanish, and online calculators that help borrowers determine their pre-payment amounts could disappear. Also, there would be less outreach to borrowers in the income-driven repayment program. "Some of the things that are being stripped out here are definitely ways to save money in the system," according to an Associate Director for Post-Secondary Education at the Center for American Progress. The changes would save taxpayers an estimated $130 million over the next five years, according to Department officials.
Critics of this plan claim that the "Education Department will be overly reliant on a single student-loan company." Several state attorneys voiced their concern with Secretary DeVos' decision to rescind the Obama-era memos; that "[rolling] back essential protections imperils millions of student-loan borrowers and families." Guidance from the Obama administration "called for the creation of a single online platform that all borrowers would use to make payments, regardless of which server they were assigned." Department officials defend the plan, maintaining that the "new system would create efficiencies in oversight by holding the primary servicer accountable."
Statistics show that 44.2 million U.S. students are burdened with student loan debt. While student loans are one of the ways in which students can pay for college, there are ways to help pay for college without breaking the bank and going into massive debt. Free college scholarships and grants are forms of aid that help pay for college and do not require repayment, and are awarded for a multitude of different academic, athletic and extracurricular achievements. Even students who do not particularly excel in school can land scholarships for average students or even win free college scholarships just for being of a specific race. Odds are, if you're wondering what can land you a scholarship, there's probably a category for it.