Education Commons^™

Federal Student Loan Servicing Accountability And Incentives In Contracts, Rajeev Darolia, Andrew Sullivan

Institute for the Study of Free Enterprise Working Papers

Student loan servicers play a critical and underappreciated role in federal student loan programs. The federal government contracts out to servicers an array of many of the most critical functions related to student loan repayment, including account management, payment processing, and the provision of information about payment plans and solutions for distressed borrowers. In fact, most borrowers’ interactions with federal student loan repayment are almost exclusively with their servicer. We aim to improve upon the scarce research literature about federal student loan servicers by exploring the complicated set of measures that determine how servicers are compensated for servicing each debtor …