Announcing the Next Generation of Federal Student Loan Services

By: Richard Cordray, Chief Operating Officer, Office of Federal Student Assistance, U.S. Department of Education

Today I am pleased to announce that Federal Student Aid (FSA) has released the solicitation for what we call the Unified Service and Data Solution (USDS). USDS is the long-term loan management solution designed to provide federal student loan borrowers with a 21st century customer experience. Building on lessons learned from past loan management efforts, the FSA and the US Department of Education are committed to holding USDS managers accountable to a high level of performance and to focusing on key objectives such as reducing delinquencies and borrower defaults.

Currently, six loan managers support borrowers first while they are in school and then while they repay their loans. Each agent maintains its own website and contact center, trains its own staff, and conducts its own outreach to borrowers. This disjointed service system is often confusing for borrowers and, frankly, the quality of work has not always met our standards. Borrowers are understandably frustrated when they receive inconsistent information about something as important as their student loans. Too often, borrowers do not take advantage of the repayment options available, and millions of people are in default as a result.

With current loan servicing contracts due to expire in December 2023, now is the time to put in place a new, more responsible servicing system to help borrowers. More than 35 million borrowers with federally administered student loans rely on us to help them achieve their life goals through higher education.

The USDS will replace the former service contracts for direct loans and Federal Family Education Loans (FFEL) program loans administered by the federal government with the following general objectives:

  • provide all federally administered borrowers with comprehensive account management capabilities on;
  • reduce disruption of account transfers; and
  • increase manager accountability to reduce late and default payments and other customer service criteria through clear and measurable service level agreements.

The FSA has already taken significant steps to implement the next generation of lending services. The USDS represents the culmination of the FSA Next Gen Initiative. This initiative modernizes FSA’s technology, processes and operations to improve user experience and outcomes for students, parents and borrowers. We are building on investments made in recent years, such as Digital and Customer Care (DCC) platforms – which include the website – and a data platform called Enterprise Data Management and Analytics Platform Services (EDMAPS).

USDS Services will manage platforms, contact centers and manual processing activities for all non-specialized loan servicing tasks. Client interface and processing work currently associated with specialized programs, such as the Public Service Loan Relief Program (PSLF), TEACH Grants, and Total and Permanent Disability Discharge (TPD), will be transferred to and the FSA. Business process operations (BPO) suppliers.

These considerable efforts cannot be accomplished immediately, which is why the FSA takes a phased approach. We are launching a targeted set of high-yield enhancements when USDS services go live.

On the go-live date, USDS services will modify their communications to borrowers to co-brand with FSA and provide account authentication via the FSA ID. This will produce a single sign-on experience for customers as they transition to full account management functionality on

Within five years of the go-live date, FSA will move full account management, branding, and reimbursement from USDS servicer websites. Meanwhile, FSA plans to improve service functionality through a single FSA-branded interface, create a service data repository to improve the account transfer process, and strengthen cybersecurity.

Ultimately, our goal at FSA is to provide a better customer experience for all federal student loan borrowers. They will be able to manage their entire student aid experience, from the end of the Free Application for Federal Student Aid (FAFSA®) form to successfully repay their loans, on They will also be supported by high-quality contact centers and multiple self-service digital tools that will help them use and understand federal student aid programs.

The FSA plans to award new contracts this winter and expects USDS repairers to start in December 2023, when current contracts expire. Going forward, we will continue to focus on greater efficiency, less complexity, and better experiences and outcomes for borrowers.

Comments are closed.