New Report Suggests 6 Ways To Improve Student Loan Servicing

Contact: Erin Timmons
Managing Editor
(202) 785-6959


NASFAA Task Force Survey Finds Need For Greater Communication, Standardization In Servicing    

February 4, 2015 – Washington, D.C.: The Department of Education (ED) should take six steps to improve student loan servicing for borrowers, according to the final report of a task force on student loan servicing issues, released today by the National Association of Student Financial Aid Administrators (NASFAA) in partnership with the National Direct Student Loan Coalition (the Coalition).

After surveying more than 2,200 financial aid administrators from more than 1,500 higher education institutions, the task force uncovered a large amount of misinformation and miscommunication between borrowers and the student loan servicers that collect their monthly payments -- which can lead to confusion, misunderstanding, and potentially, missed payments or default. 

To streamline student loan servicing and strengthen the relationship between servicers and borrowers, NASFAA and the Coalition recommend that ED:

#1: Develop a central loan portal where students can manage all of their loans. Borrowers need a one-stop shop to see, in real time, their total indebtedness and repayment progress.

#2: Remove servicer branding from communication with borrowers. Instead of co-branded logos from servicers borrowers may not recognize, all communication should clearly come from ED. 

#3: Provide standard consumer protections for student borrowers that are in line with other consumer financial products. As with car loans, mortgages, credit cards, and other financial products, student loans should carry an enumerated, standardized set of consumer protections. 

#4: Permit the use of innovative technologies in order to allow servicers to more efficiently and effectively communicate with borrowers. Servicers should have the flexibility to send information in ways proven to work best for individual borrowers.

#5: Incorporate the regulatory requirements of entrance and exit counseling should be into ED’s Financial Awareness Counseling Tool (FACT). ED already has an innovative, interactive, and comprehensive tool that more borrowers could benefit from using. 

#6: Develop a policies and procedures manual for servicing. Transparent student loan servicing processes would help borrowers and the financial aid administrators who serve them to better understand requirements and tackle repayment successfully. 

Student loan servicers are contracted by ED to collect payments from borrowers, who will never become debt free unless they have the clear communication and processes necessary to work with their servicers. 

“Financial aid administrators have a front seat when student loan servicing goes wrong -- and when it goes right,” said NASFAA President Justin Draeger. “These recommendations are built on the experiences and observations from professionals who want to ensure all borrowers can meet their financial obligations in a clear, fair, and manageable way.” 

For more information on the rationale and implementation of each of the recommendations, please see the full report or contact a NASFAA expert at 202-785-6959 or  


The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents more than 20,000 financial aid professionals at nearly 3,000 colleges, universities, and career schools across the country. NASFAA member institutions serve nine out of every ten undergraduates in the United States. Based in Washington, D.C., NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators. For more information, visit

About the National Direct Student Loan Coalition (the Coalition): 

The National Direct Student Loan Coalition (the Coalition) is an alliance of schools dedicated to the continuous improvement and strengthening of the federal Direct Loan program. Coalition members are practicing financial aid professionals. The Coalition's goals are to:

  • Advocate high standards in the delivery of student loans by all participants in the process;
  • Facilitate efficient delivery of loans by providing a liaison to the U.S. Department of Education on behalf of schools;
  • Provide an effective communication network among participating schools to improve program administration;
  • Educate public officials, the financial aid community, professional associations, the media and the general public on student lending; and
  • Promote policies to minimize the use of student borrowing and improve loan terms for those who borrow.