(Adds details, Education Secretary’s op-ed, background, paragraphs 2-5)
WASHINGTON, May 19 (Reuters) – The U.S. Education Department said on Friday it was changing its approach to student-loan servicing, awarding a contract to handle outstanding debts to one company.
Under former President Barack Obama, much of the $1.3 trillion business of student lending was moved from banks and other companies to the federal government. Four companies still handled servicing the loans. Navient Corp, which was spun off Sallie Mae in 2014, is the largest servicer.
“We’re confident that the final decision will have someone who steps up and can perform,” Acting Undersecretary Jim Manning said on a call with reporters.
In an op-ed published on the Wall Street Journal website around the same time as the call, Education Secretary Betsy DeVos wrote that the servicing requirements put in place by Obama’s administration created a “chaotic system” that generated numerous consumer complaints and was not sustainable.
She added that the single servicer will create a user platform and establish a standardized process for handling customer calls. (Reporting by Lisa Lambert; Editing by Jonathan Oatis and David Gregorio)
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