Notice2025-17216
Request for Information on Developing and Implementing a Common Manual for the Federal Direct Loan Program
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 8, 2025
Issuing agencies
Education Department
Abstract
The U.S. Department of Education (ED), office of Federal Student Aid (FSA) is interested in developing and instituting common standards to serve as a centralized, authoritative source of servicing and collections policies and procedures under the William D. Ford Federal Direct Loan (Direct Loan) Program. This initiative will complement the current performance-based contracts and is aimed at establishing a set of clear, concise, consistent, and enforceable federal standards for the operations and oversight of the Direct Loan Program, drawing lessons from the Common Manual model used for the Federal Family Education Loan (FFEL) Program. This effort is intended to promote consistency, transparency, and effectiveness across all post-disbursement servicing and collections functions.
Full Text
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<title>Federal Register, Volume 90 Issue 171 (Monday, September 8, 2025)</title>
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[Federal Register Volume 90, Number 171 (Monday, September 8, 2025)]
[Notices]
[Pages 43181-43184]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-17216]
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DEPARTMENT OF EDUCATION
[Docket ID FSA-XXXX-XXXX]
Request for Information on Developing and Implementing a Common
Manual for the Federal Direct Loan Program
AGENCY: Office of Federal Student Aid (FSA), U.S. Department of
Education.
ACTION: Request for Information (RFI).
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SUMMARY: The U.S. Department of Education (ED), office of Federal
Student Aid (FSA) is interested in developing and instituting common
standards to serve as a centralized, authoritative source of servicing
and collections policies and procedures under the William D. Ford
Federal Direct Loan (Direct Loan) Program. This initiative will
complement the current performance-based contracts and is aimed at
establishing a set of clear, concise, consistent, and enforceable
federal standards for the operations and oversight of the Direct Loan
Program, drawing lessons from the Common Manual model used for the
Federal Family Education Loan (FFEL) Program. This effort is intended
to promote consistency, transparency, and
[[Page 43182]]
effectiveness across all post-disbursement servicing and collections
functions.
DATES: Comments must be received on or before October 8, 2025.
ADDRESSES: Comments must be submitted via the Federal eRulemaking
Portal at <a href="http://regulations.gov">regulations.gov</a>. However, if you require an accommodation or
cannot otherwise submit your comments via <a href="http://regulations.gov">regulations.gov</a>, please
contact the program contact person listed below under FOR FURTHER
INFORMATION CONTACT. ED will not accept comments by fax or by email, or
comments submitted after the comment period closes. To ensure that ED
does not receive duplicate copies, please submit your comments only
once. Additionally, please include the Docket ID at the top of the
comments.
ED strongly encourages you to submit any comments or attachments in
Microsoft Word format. If you must submit a comment in Adobe Portable
Document Format (PDF), ED strongly encourages you to convert the PDF to
``print-to-PDF'' format, or to use some other commonly used searchable
text format. Please do not submit the PDF in a scanned format. Using a
print-to-PDF format allows ED to electronically search and copy certain
portions of your submissions to assist in the proposed Direct Loan
Common Manual creation and implementation.
Federal eRulemaking Portal: Please go to <a href="http://regulations.gov">regulations.gov</a> to submit
your comments electronically. Information on using <a href="http://regulations.gov">regulations.gov</a>,
including instructions for finding a rule on the site and submitting
comments, is available on the site under ``FAQ.''
Privacy Note: ED's policy is to generally make comments received
from members of the public available for public viewing on the Federal
eRulemaking Portal at <a href="http://regulations.gov">regulations.gov</a>. Therefore, commenters should
include in their comments only information about themselves that they
wish to make publicly available. Commenters should not include in their
comments any information that identifies other individuals or that
permits readers to identify other individuals. ED will not make
comments that contain personally identifiable information (PII) about
someone other than the commenter publicly available on <a href="http://regulations.gov">regulations.gov</a>
for privacy reasons. This may include comments where the commenter
refers to a third-party individual without using their name if ED
determines that the comment provides enough detail that could allow one
or more readers to link the information to the third party. If your
comment refers to a third-party individual, to help ensure that your
comment is posted, please consider submitting your comment anonymously
to reduce the chance that information in your comment about a third
party could be linked to the third party. ED will also not make
comments that contain threats of harm to another person or to oneself
available on <a href="http://regulations.gov">regulations.gov</a>.
Accessible Format: Individuals with disabilities can obtain this
document in an accessible format (e.g., braille, large print,
audiotape, or compact disc) on request to the program contact person
listed under FOR FURTHER INFORMATION CONTACT.
FOR FURTHER INFORMATION CONTACT: Christian Lee Odom, Ombudsman, Federal
Student Aid, U.S. Department of Education, 400 Maryland SW, Washington,
DC 20202, Telephone: 202-215-7174, Email: <a href="/cdn-cgi/l/email-protection#e7a88a859283948a8689a78283c9808891"><span class="__cf_email__" data-cfemail="1d52707f68796e707c735d7879337a726b">[email protected]</span></a>.
If you are deaf, hard of hearing, or have a speech disability and
wish to access telecommunications relay services, please dial 7-1-1.
SUPPLEMENTARY INFORMATION:
Background
The U.S. Department of Education (ED) administers the William D.
Ford Federal Direct Loan (Direct Loan) Program under which students and
parents, who are eligible, can borrow directly from the federal
government at participating institutions of higher education. The
Direct Loan program is the single largest source of federal financial
assistance to support students who are in pursuit of a postsecondary
education. In Fiscal Year (FY) 2025, ED estimates that $93.1 billion in
new Direct Loans will be originated. As of June 2025, more than 40.2
million individuals have borrowed approximately $1.5 trillion in Direct
Loans. ED also holds loans from other Title IV programs, including the
FFEL Program and the Federal Perkins Loan Program.
Federal Student Aid (FSA) is the lender for the Direct Loan
Program. In order to carry out FSA's responsibilities under the Higher
Education Act (HEA) of 1965, FSA contracts with multiple vendors, known
as student loan servicers, to handle loan management, call center
support, and repayment assistance. In April 2024, FSA entered into new
contracts through the Unified Servicing and Data Solution (USDS)
initiative with the ultimate goal to streamline the Direct Loan
servicing environment for borrowers. FSA also works with multiple
vendors--including the U.S. Department of the Treasury--to carry out
voluntary and involuntary collections activities, such as the Treasury
Offset Program and administrative wage garnishment.
The current federal student loan servicing and collections
contracts are performance-based contracts. Instead of a prescriptive
Statement of Work dictating how its vendors will achieve project
milestones for the Direct Loan Program, FSA's contracts describe
overall objectives and outputs and allow the vendors flexibility to
conduct operations in a manner that is cost-effective while ensuring
they achieve contract milestones.
Over the last 15 years, federal, state, and private stakeholders
have raised concerns about the lack of published standards and
corresponding inconsistencies in Direct Loan servicing operations that
has led to borrower confusion and adversely impacted the ability for
some borrowers to repay their federal student loans. In response, FSA
has relied on change requests (CRs) to modify servicer practices. CRs
have dramatically driven up the costs of student loan servicing because
such requests are done outside of the normal contracting process.
Utilizing CRs also has created unnecessary borrower and stakeholder
frustration because many of the CRs have overturned existing practices
without public feedback and undermined the basis of performance-based
contracting, as FSA began to micromanage servicer activities.
To remedy these challenges, FSA seeks input from borrowers, student
loan servicers and other vendors, advocates, higher education
institutions, states, federal partners, and other affected parties
about how best to structure a common manual with a set of common
standards to improve both borrower outcomes and improve program
delivery. This initiative stems from a leadership directive for FSA to
properly manage the Direct Loan Program and to translate recurring
borrower complaints and systemic issues into actionable improvements. A
common manual will establish a framework of policies and practices that
allows FSA's vendors to focus on program outcomes.
This RFI invites comments about the following questions:
<bullet> What policies and procedures governing student loan
servicing and collections would benefit from standardization at the
federal level?
<bullet> What potential challenges could be addressed through a
common manual developed by Federal Student Aid?
<bullet> What best practices should inform a potential framework
for common standards?
[[Page 43183]]
<bullet> What effective implementation and oversight strategies
should Federal Student Aid consider ensuring the common manual remains
accurate, relevant, and consistently updated after its initial
implementation?
The Need for Common Standards
To prepare for this RFI, FSA conducted a review of current Direct
Loan servicing and past collection practices that revealed several gaps
between federal student loan guidance and implementation, especially in
a multi-vendor/participant environment. These gaps highlighted where
federal guidelines are lacking or not clear, resulting in inconsistent
treatment of borrowers. Key gaps include:
[ssquf] Inconsistent Implementation of Guidance: FSA has
traditionally issued high-level directives, which have led to
inconsistent interpretation across vendors. As a result, borrowers
often experience different outcomes based solely on the vendor assigned
to manage their loans.
[ssquf] Lack of Standard Protocols for Borrower Communication and
Counseling: Minimal federal requirements on when and how servicers
communicate with borrowers have led to a wide variation in
communication protocols across the industry. The inconsistency is
especially pronounced for the circumstances surrounding when servicers
grant forbearances and deferments to borrowers as alternatives to
income-driven repayment options.
[ssquf] Uneven Vendor Practices During Transfers and Transitions:
Federal guidance has focused more on technical data transfers than on
ensuring a smooth borrower experience. Servicers vary in how they
notify borrowers of transfers, retain auto-debit settings, and handle
customer support during transitions.
[ssquf] Areas Not Covered by Clear Guidance: Certain servicing
tasks lack Federal guidance, leaving servicers to devise their own
approaches. Examples include how to apply overpayments and conduct
outreach to delinquent borrowers. These gaps may explain the variations
between borrowers' experiences.
Common federal standards would address these gaps by ensuring that
all program participants, such as <a href="http://StudentAid.gov">StudentAid.gov</a>, contact centers, loan
servicing vendors and FSA's vendors supporting default resolution,
follow uniform procedures across key functions. This will promote
consistent treatment, reduce borrower confusion, and ensure that
guidance is not left to discretionary interpretation or external
sources.
Impact of Gaps: Borrower Pain Points
Borrowers, federal and state oversight agencies, and advocates have
identified repeated issues stemming from inconsistent guidance and
practices among loan servicers under contract with FSA. These
inconsistencies cause unequal borrower treatment and limit the
effectiveness of federal repayment protections. Key pain points
include:
[ssquf] Poor and Inconsistent Communication: Communication content
and touchpoints can vary between FSA's multiple program participants
(e.g., <a href="http://StudentAid.gov/FSA">StudentAid.gov/FSA</a> Contact Center/Business Process Operations
vendors, loan servicers, Default Resolution Group, etc.). This results
in borrowers receiving differing levels of communication and specifics
depending on the entity with which they are engaging in and the status
of their loan. Because of this, borrowers frequently report receiving
conflicting or incorrect information at various touchpoints in their
federal student loan journey, leading to confusion and frustration.
Such inconsistent communication means that borrowers may get different
advice about the same question, depending on whom they talk to or which
company services their loans, which undermines confidence and trust in
the Federal student aid system.
[ssquf] Unhelpful Repayment Support and Customer Service: A top
complaint, among those that are reviewed by FSA, is that FSA and its
agents do not proactively assist borrowers navigating repayment and
provide inconsistent information about repayment options, including
when borrowers should receive a forbearance or deferment. This may be
the cause of unnecessary distress by borrowers.
[ssquf] Confusing Servicer Transitions: When loans are transferred
between servicers, borrowers can experience problems with their
accounts. Common grievances include not receiving timely notice of the
transfer, difficulty accessing the new servicer's website or records,
interruption of auto-debit payments, and lost payment histories or
paperwork in the handoff. This leads to borrower complaints submitted
to FSA's Student Loan Ombudsman as well as to external organizations
that assist borrowers.
[ssquf] Barriers to Understanding and Accessing Repayment Options:
Most borrowers struggle to navigate the complexity of multiple
repayment plans put in place by Congress and previous Administrations;
FSA programs are complex and contingent upon the borrower's unique set
of factors that may not be readily available. The lack of clear,
accessible information creates a barrier to entry that could improve
program outcomes and borrower engagement.
[ssquf] Inconsistent Handling of Issues and Errors: When problems
occur (e.g., a payment is misapplied, an error displays on a borrower's
account, etc.), borrower experiences can vary widely. Some inquiries
are resolved quickly, while others can take much longer or require
multiple attempts at resolution. The lack of documented error
resolution procedures means borrowers must often file a complaint to
fix mistakes with outcomes depending on escalation for what should be
routine issues for operations to resolve.
Alignment With PBO Authority and Purpose
While ED's Office of Postsecondary Education (OPE) issues federal
regulations and FSA provides policy implementation guidance through the
FSA Handbook, Dear Colleague Letters, contract requirements, contract
modifications, change requests, operational guidance to vendors, and
platforms like <a href="http://StudentAid.gov">StudentAid.gov</a> and Partner Connect, this guidance is
fragmented and not readily available to the public or impacted parties.
There is no single framework to govern post-disbursement servicing and
collections practices in a cohesive, consistent manner. The resulting
common standards will address these operational challenges.
Section 141 of the HEA establishes the Office of Federal Student
Aid as a performance-based organization (PBO) responsible for managing
the administrative and oversight functions supporting the federal
student aid programs (20 U.S.C. 1018). Under this authority, FSA is
charged with improving service to students and participants, reducing
administrative costs, increasing operational accountability, and
ensuring the integrity of the federal student aid system. Specifically,
FSA, as the PBO, is responsible for:
[ssquf] providing customer service, training, and user support
related to the administration of Federal Student Aid;
[ssquf] designing, acquiring, and managing systems and information
technology infrastructure that support loan servicing and collections;
[ssquf] administering financial, contracting, and operational
aspects of Title IV servicing and collections;
[ssquf] implementing an open, common, integrated system for aid
delivery;
[[Page 43184]]
[ssquf] ensuring program integrity by maintaining accurate and
timely data; and
[ssquf] taking proactive steps to prevent improper use of systems
or access devices.
See 20 U.S.C. 1018(b)(2).
The development of common standards for applicable programs
authorized under the HEA falls squarely within the scope of the PBO's
responsibilities as outlined in the HEA. Moreover, common standards
support the PBO's core goals of improving service delivery,
standardizing borrower communications and support, and safeguarding the
consistent implementation of policies across all contractors involved
in Direct Loan servicing and collections.
The PBO statute also requires the Federal Student Loan Ombudsman to
help borrowers resolve loan-related complaints, compile and analyze
complaint data, make related recommendations, and annually report about
the ombudsman's activities and effectiveness. Under its current
leadership, FSA will enhance the focus of its Office of the Ombudsman
to provide consumer education--informed by FSA's robust customer
listening--and conduct outreach across the financial aid stakeholder
community. Expanding the Federal Student Loan Ombudsman's focus will
help ensure students, parents, and borrowers make more-informed
decisions about postsecondary education and career training after high
school and will lead to better borrower outcomes.
Proposed Initiative: Common Manual for the Federal Direct Loan Program
FSA proposes to develop and implement a common manual Direct Loan
servicing and collections that does the following:
1. Establishes clear, concise, consistent, and standards across
high-impact servicing and collections functions.
2. Draws lessons from past efforts like the FFEL Program Common
Manual, while designing a modern framework tailored to the Direct Loan
Program and federal student aid system.
3. Proceeds in phases, starting with a targeted set of guidance and
practices to pilot, refine, and scale.
Development activities may include, but are not limited to, the
following:
[ssquf] Reviewing feedback from this RFI to prioritize the
development of common standards.
[ssquf] Defining the scope and functional areas to be covered
(e.g., borrower communications, income-driven repayment processing,
repayment and delinquency support, default and loan transfers).
[ssquf] Analyzing current federal and state regulations and
identifying alignment opportunities.
[ssquf] Piloting the framework in two to three focus areas.
[ssquf] Drafting common standards and revising related guidance,
procedures, and contracts.
[ssquf] Designing a monitoring and compliance approach.
[ssquf] Conducting peer reviews and finalizing documentation.
Request for Information
FSA invites feedback on the development and implementation of a
common manual for the Federal Direct Loan Program. We particularly
welcome input on the following:
1. Prioritization: Which specific Direct Loan servicing and
collections functions, guidance, or practices most urgently require
standardization?
2. Best Practices for Student Loan Servicing Excellence: For all
high-priority servicing and collections areas (including but not
limited to borrower communications, application processing, and
delinquency/pre-default outreach), what best practices from within and
outside the student loan industry could be incorporated into a common
standard framework?
3. Balancing Standardization with Flexibility and Unintended
Impacts: How can FSA ensure consistent service across its multiple
vendors while allowing for innovation or tailored support to unique
borrower populations? What unintended consequences should be avoided?
Where is flexibility most important, and where is standardization most
critical?
4. Implementation and Compliance: What mechanisms (e.g.,
contractual obligations, performance metrics, monitoring, and
transparency) are most effective in ensuring compliance with standards?
What are the potential challenges to implementation and how might they
be overcome?
This is an RFI only. This RFI is not a Request for Proposal (RFP)
or a promise to publish Direct Loan servicing and collections standards
in a specific timeframe. This RFI does not commit any ED office to
contract for any supply or service. We are not seeking proposals and
will not accept unsolicited proposals. ED will not pay for any
information or administrative costs that you may incur in responding to
this RFI. The documents and information submitted in response to this
RFI become the property of the U.S. Government and will not be
returned.
Electronic Access to This Document: The official version of this
document is the document published in the Federal Register. You may
access the official edition of the Federal Register and the Code of
Federal Regulations at <a href="http://govinfo.gov">govinfo.gov</a>. At this site you can view this
document, as well as all other documents ED published in the Federal
Register, in text or Portable Document Format (PDF). To use PDF, you
must have Adobe Acrobat Reader, which is available free at the site.
You may also access documents ED published in the Federal Register
by using the article search feature at <a href="http://federalregister.gov">federalregister.gov</a>.
Specifically, through the advanced search feature at this site, you can
limit your search to documents published by ED.
James Bergeron,
Acting Chief Operating Officer, Federal Student Aid.
[FR Doc. 2025-17216 Filed 9-5-25; 8:45 am]
BILLING CODE P
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