The U.S. Department of Education says it will hand over the work of servicing federal student loans to one company—from the current roster of nine—in what it says is a money-saving move, triggering criticism from student loan advocates who fear customer service will be worsened.
USA Today reports the department estimates the move will save about $130 million in the next five years.
“Savings are expected to increase significantly over the life of the contract,” Secretary of Education Betsy DeVos says in a statement issued on Friday. “Borrowers can expect to see a more user-friendly loan servicing interface, shorter email and call response times, and an improved payment application method.”
Of about $1.4 trillion of student debt now owed by 44 million Americans, a vast majority of the total—more than $1 trillion—is issued by the federal government. But the government currently outsources the work of handling payment, collection, payment deferment and general customer service to nine private companies.
