Senator Lankford Introduces Bipartisan Bill to Benefit Student Loan Borrowers and Taxpayers by Promoting Competition
WASHINGTON, DC – US Senators James Lankford (R-OK), Roy Blunt (R-MO), Elizabeth Warren (D-MA), and Jeanne Shaheen (D-NH) today introduced the bipartisan Student Loan Servicer Performance Accountability Act. The legislation would benefit student loan borrowers and taxpayers by protecting and strengthening performance-based accountability of federal student loan servicers through greater competition and stronger oversight.
“The Student Loan Servicer Performance Accountability Act is a commonsense bill that temporarily suspends the US Department of Education from awarding a servicing contract to a sole provider for all student loans owned by the US Department of Education,” said Lankford. “As the nation’s student loan debt continues to grow, we need to enact measures that will ensure students have all the resources available to them so they can repay their loans and get good customer service. Moving to a single federal student loan servicer would not accomplish this goal because it eliminates performance-based competition that incentivizes improved service for students. I look forward to working with my colleagues on this bipartisan legislation to prevent any disruption in service for borrowers to pay back their student loan debt.”
“Maintaining choice and competition amongst student loan servicers is the best way to ensure they will continue improving services for student borrowers,” said Blunt. “This bill will strengthen the performance-based incentives we have now, and prevent any one student loan servicer from becoming so large it poses a risk to taxpayers. I urge my colleagues to support this bipartisan, commonsense measure.”
“The federal government has a responsibility to make sure student loan servicing is working for student borrowers and for taxpayers. The Education Department’s plan to switch to a single servicer for its trillion-dollar loan portfolio heads in the wrong direction and could create a ‘too big to fail’ federal contractor,” said Warren. “Our bipartisan bill will ensure that there is real competition in student loan servicing and that servicers are held accountable for serving student borrowers effectively.”
“The Department of Education’s plan to reduce the number of contracted student loan servicers to just one would reduce the quality of assistance, make it harder for borrowers to manage their debt, and ultimately hurt our students, their families and our economy,” said Shaheen. “The Student Loan Servicer Performance Accountability Act will ensure strong competition and oversight so that students have high quality service so they can make informed decisions about their loan and repayment options.”
The current federal student loan servicing contracts expire in 2019. In May 2017, the Department of Education released a revised plan for the servicing competition that would reduce the number of federal student loan servicers from nine to one servicer for the entire trillion-dollar federal direct loan portfolio. This plan would limit the Department’s ability to ensure high-quality service to student borrowers.
The Student Loan Servicer Performance Accountability Act would:
- Cancel the Department of Education’s current competition for a single federal student loan servicer;
- Ensure performance-based competition in federal student loan servicing by requiring the participation of multiple servicers that contract directly with the Department of Education;
- Promote competition by requiring the Department of Education to allocate loans to servicers based on measures of their performance, including scores on borrower satisfaction; and
- Prohibit the Department of Education from awarding all federal student loans to a single federal student loan servicer and creating a federal student loan monopoly.