Financial-Aid Administrators to Scrutinize Student-Loan Servicers

Student-loan servicers, which have been criticized by consumer advocates and federal regulators alike, are facing scrutiny from a new group: financial-aid administrators.

In a statement issued on Tuesday, the National Association of Student Financial Aid Administrators and the National Direct Student Loan Coalition announced that they were forming a task force on servicing issues.

The 10-member task force will focus on improving the Department of Education’s servicing contracts and ensuring consistency in servicer practices. Early next year, the group will release a report detailing differences in practices among the department’s servicers, along with recommendations to the department on improving student-loan servicing.

“Over the last several years, financial-aid administrators have voiced concerns about disruptions, inconsistencies, and lack of quality servicing on federal student loans,” said Justin Draeger, president of the financial-aid administrators’ group. “However, it has been difficult to fully grasp the extent to which servicing problems exist, how widespread they might be, and how servicing practices may differ between various providers.”

“This task force,” he said, “aims to more closely examine and report on these challenges.”