This bill strengthens accountability requirements for companies that manage federal student loans on behalf of the Department of Education. Before hiring or renewing contracts with loan servicers, the Department must evaluate their past performance, customer satisfaction ratings, any previous penalties or lawsuits, and their ability to serve borrowers in multiple languages and assist those at risk of default. The law requires loan servicers to place borrowers into interest-free administrative forbearance when servicers make errors, provide credit toward loan forgiveness programs for periods affected by servicer mistakes, and remove negative credit information caused by servicer errors. Servicers must also maintain borrower records for at least three years after loans are paid off or transferred. The Department must review existing contracts within 180 days and report annually to Congress on servicer compliance. Additionally, the Government Accountability Office will conduct a two-year study examining how loan transfers between servicers cause errors and disruptions, with recommendations due to Congress within two years of the bill's enactment.
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