DeVos Moving Ahead on Overhaul of Student Loan Processing System
The Trump administration is moving forward to overhaul the current online student loan processing and servicing platform. The new program will be known as the Next Generation Financial Services Environment, or better known as NextGen. The upgrade will focus on better customer service and stronger consumer protections while still ensuring students will get the money that they need to pay for a college education.
It is most often agreed that the student loan debt totaling almost $1.5 trillion puts additional strain on the economy as this debt only further delays the borrowers from purchasing homes, vehicles and the like because of their large student loan debt after graduation. The goal of NextGen is to give prospective borrowers a better understanding of the financial implications their debt will have so they can make more informed decisions when it comes to loan types, repayment options and protections.
The Office of Federal Student Aid (FSA) has been tasked with overseeing the NextGen project, and aims to build a platform that with match users of the online system with a portfolio of options tailored to match their goals and financial circumstances. Part of this project includes a mobile app called, MyStudentAid that will make access to educational content and counseling available on the borrower’s smartphones.
DeVos’s push also includes specific reforms to reduce financial hardship and curb default rates. Those reforms include:
Providing additional customer service/counseling for borrowers at the greatest risk of default
Reforming the process for loan forgiveness for disabled borrowers or those incapable of repaying their loans
Completing pilot programs to explore innovative ways to assist delinquent borrowers
Expanding available data regarding loans in default to provide a more clear and direct picture to borrowers
Launching a feedback system to encourage borrowers to easily come forward with concerns/complaints about loan servicers or educational institutions.