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VSAC Begins Federal Loan Servicing Contract
WINOOSKI — Vermont Student Assistance Corporation (VSAC) has joined other state-based nonprofits working under government contract to service federal education loans.
Servicing involves issuing loan bills, helping borrowers select a payment plan, collecting payments, and assisting borrowers at risk of defaulting on their loans. Most students and parents take 10 years or more to repay their education loans, and the relationship with the servicer is critical to ensuring a successful outcome.
VSAC has a long history of financing and servicing both federal and private education loans. In 2010, the government switched to a system in which all federal education loans are financed and disbursed directly by the government. However, the government contracts with outside organizations to provide servicing.
The contract under which VSAC will work is the result of efforts by Vermont’s three-member congressional delegation to ensure that state-based nonprofits are able to compete with private corporations for the government work.
“We are thrilled to have met the U.S. Department of Education (ED) standards for selection as a federal education loan servicer, and are looking forward to applying our years of expertise to this new group of accounts,” said Don Vickers, VSAC’s president and CEO. “We are also very grateful to the Vermont congressional delegation for its support of nonprofits like VSAC.”
The three delegation members — U.S. Senators Bernie Sanders and Pat Leahy and U.S. House member Peter Welch — applauded the news.
“I am delighted that the federal Department of Education, recognizing VSAC’s excellent history of working with students, has selected them to service federal education loans to college students,” said Sanders. “This is something that my office has supported. We understand how effective VSAC is in Vermont. I am glad the Department of Education agrees and has selected VSAC to service these loans.”
“Congratulations to VSAC on this important accomplishment,” Welch added. “VSAC has provided generations of Vermonters with access to higher education which is the gateway to America’s middle class. The dedicated VSAC staff provide critical support for students as they navigate the often Byzantine maze of student financial aid. Without their good work, too many Vermonters would miss the opportunity to pursue a college education.”
Said Leahy: “The Vermont Student Assistance Corporation has a long record of providing exceptional services and programs to Vermont students, families and colleges. As Congress worked to consolidate student lending under the Direct Loan Program, Senator Sanders, Representative Welch and I worked hard with VSAC and the Obama Administration to ensure that nonprofit servicers like VSAC could continue to provide the quality services that Vermonters and students across the country have counted on. Servicing new loans will allow VSAC to continue to help make a college education possible through low cost loans and by providing innovative programs aimed at linking young students’ career ambitions with educational requirements and opportunities. I will continue to stand with VSAC as they compete nationally to service more loans.”
VSAC has received an initial allocation of 100,000 federal education loan accounts to manage. The agency hopes to receive additional accounts through a competitive process based on customer satisfaction, default rates, and an evaluation by the ED.
The ED is randomly assigning loan accounts to agencies like VSAC in order to be able to compare servicers’ performance. In addition to handling new accounts, VSAC continues to service 82,000 federal education loans it made prior to 2010.
VSAC has set up a Web site for customers whose accounts will be serviced under the new contract. The address is www.vsacfederalloans.org.