The new government spending bill wants to ensure student-loan companies don't get away with bad behavior.
On Monday, the House appropriations committee released the text of its $1.7 trillion government spending bill for the upcoming fiscal year. The bipartisan package rejected President Joe Biden's request to increase funding for the Federal Student Aid office to allow it to overhaul the federal student-loan servicing system., which covered everything from social media censorship to healthcare, kept federal student aid steady at $2 billion.
It said that new borrowers' accounts will be allocated to servicers"on the basis of their past performance," and that the Education Department will"re-allocate accounts from servicers for recurring non-compliance with FSA guidelines, contractual requirements, and applicable laws, including for failure to sufficiently inform borrowers of available repayment options."
The bill also said that Federal Student Aid will"incentivize more support to borrowers at risk of delinquency or default," along with increasing transparency by publishing data on the performance of student-loan companies.a plan to revamp the student-loan repayment system for borrowers by creating a Unified Servicing and Data Solution , which he said will hold all servicers accountable for"high level of performance" and work to reduce delinquency and default.
Borrowers have reported a number of issues with student-loan companies over the past year. For example, MOHELA — which manages all accounts under the Public Service Loan Forgiveness program — has been criticized for