WASHINGTON — The Education Department has announced it will move servicing of $1.3 trillion in federal student loans to a single provider.
The department said Friday the change will improve customer service and increase oversight. No details were given on when the provider will be chosen.
Currently, there are ten companies servicing student loans. In an op-ed published Friday, Education Secretary Betsy DeVos calls the previous system, put in place under President Barack Obama, “chaotic.”
She adds, “Students will now be treated as valued customers and afforded the protections and respect they deserve.”
Rohit Chopra, Senior Fellow at the Consumer Federation of America, raises concerns that the government will be too reliant on a single company. He adds that the change will do little to tame student debt defaults.