Department of Education awards $41M for loan consolidation and aid servicing to Navient Corporation
Contract Overview
Contract Amount: $40,994,279 ($41.0M)
Contractor: Navient Corporation
Awarding Agency: Department of Education
Start Date: 2019-09-01
End Date: 2019-12-15
Contract Duration: 105 days
Daily Burn Rate: $390.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: THE PURPOSE OF THIS TASK ORDER IS TO LOAN CONSOLIDATION SERVICES AND ADD FUNDING FOR TITLE IV AID SERVICING THROUGH APPROXIMATELY 09/30/2019.
Place of Performance
Location: ASHLEY, LUZERNE County, PENNSYLVANIA, 18706
Plain-Language Summary
Department of Education obligated $41.0 million to NAVIENT CORPORATION for work described as: THE PURPOSE OF THIS TASK ORDER IS TO LOAN CONSOLIDATION SERVICES AND ADD FUNDING FOR TITLE IV AID SERVICING THROUGH APPROXIMATELY 09/30/2019. Key points: 1. Contract provides essential services for federal student loan programs. 2. Firms Fixed Price contract type suggests clear cost expectations. 3. Short duration (105 days) may indicate a bridge or interim solution. 4. Competition was full and open, suggesting a potentially competitive pricing environment. 5. Services are critical for student financial aid administration. 6. Geographic focus on Pennsylvania for servicing operations.
Value Assessment
Rating: fair
The contract value of approximately $41 million for a 105-day period represents a significant investment in student loan servicing. Benchmarking this specific task order is challenging due to its short duration and specialized nature. However, the firm fixed-price structure provides some cost certainty. Without more granular data on the specific services rendered and the volume of loans serviced, a definitive value-for-money assessment is difficult. The obligated amount of $39 million suggests a substantial portion of the award was immediately funded.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of 4 bids suggests a reasonable level of interest and competition for these services. A competitive bidding process is generally expected to drive down prices and ensure the government receives fair market value.
Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages a wider range of providers to offer their services, potentially leading to more cost-effective solutions and better service quality.
Public Impact
Benefits millions of student loan borrowers by ensuring continued servicing and aid administration. Delivers critical loan consolidation and Title IV aid servicing. Geographic impact is primarily within Pennsylvania for servicing operations. Supports a workforce involved in student loan administration and customer service.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Short contract duration raises questions about long-term strategy and potential for frequent re-competition.
- Reliance on a single contractor for critical student aid servicing requires robust performance monitoring.
Positive Signals
- Full and open competition suggests a healthy market for these services.
- Firm Fixed Price contract provides cost predictability.
Sector Analysis
The student loan servicing sector is a significant part of the financial services industry, often involving large government contracts. Companies in this space manage vast portfolios of federal and private student loans, handling billing, repayment, and customer service. This contract fits within the broader category of credit intermediation and financial services, supporting the Department of Education's mission to facilitate access to higher education through financial aid.
Small Business Impact
The data indicates this contract was not specifically set aside for small businesses, nor does it explicitly mention subcontracting requirements for small businesses. The award to Navient Corporation, a large established entity, suggests that small businesses may not have been primary participants in this specific award, though they could potentially be involved in the broader student loan servicing ecosystem through subcontracting opportunities not detailed here.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Education's contracting officers and program managers. The firm fixed-price nature provides a degree of accountability for deliverables. Transparency is generally maintained through contract award databases, though specific performance metrics and oversight activities are often internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Federal Student Loan Servicing
- Title IV Aid Administration
- Credit Intermediation Services
- Department of Education Financial Operations
Risk Flags
- Contractor Performance History
- Data Security and Privacy
- Borrower Complaint Volume
- Compliance with Servicing Regulations
Tags
department-of-education, student-loans, loan-servicing, financial-services, title-iv-aid, full-and-open-competition, firm-fixed-price, delivery-order, pennsylvania, credit-intermediation, navient-corporation
Frequently Asked Questions
What is this federal contract paying for?
Department of Education awarded $41.0 million to NAVIENT CORPORATION. THE PURPOSE OF THIS TASK ORDER IS TO LOAN CONSOLIDATION SERVICES AND ADD FUNDING FOR TITLE IV AID SERVICING THROUGH APPROXIMATELY 09/30/2019.
Who is the contractor on this award?
The obligated recipient is NAVIENT CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Education (Department of Education).
What is the total obligated amount?
The obligated amount is $41.0 million.
What is the period of performance?
Start: 2019-09-01. End: 2019-12-15.
What is Navient Corporation's track record with federal student loan servicing contracts?
Navient Corporation has a long and complex history with federal student loan servicing. The company, which spun off from Sallie Mae in 2014, has been a major servicer of federal student loans for many years. Its track record includes managing billions of dollars in loan portfolios and servicing millions of borrowers. However, Navient has also faced significant scrutiny and legal challenges related to its servicing practices, including allegations of steering borrowers into forbearance, misrepresenting repayment options, and failing to provide adequate customer service. These issues have led to investigations, consent decrees, and substantial settlements with state and federal authorities. Despite these controversies, Navient continues to hold significant federal contracts, highlighting the ongoing need for its services while underscoring the importance of rigorous oversight and performance management.
How does the value of this contract compare to other federal student loan servicing contracts?
This specific task order, valued at approximately $41 million for a roughly 105-day period, is a component of a larger federal student loan servicing apparatus. While substantial for its duration, it represents a fraction of the total annual spending on student loan servicing, which can run into billions of dollars across multiple contracts and servicers. Larger, multi-year contracts for comprehensive loan servicing often exceed hundreds of millions or even billions of dollars. The value here is indicative of a specific, time-bound need, possibly for specialized services or as a bridge to a more comprehensive solution. Comparing it directly requires understanding the scope of services and the number of loans managed, which are not fully detailed for this task order alone.
What are the primary risks associated with this contract for the Department of Education?
The primary risks associated with this contract include potential performance deficiencies by the contractor, Navient Corporation, in delivering loan consolidation and Title IV aid servicing. Given Navient's history of scrutiny, there's a risk of renewed compliance issues or borrower complaints, which could lead to reputational damage for the Department of Education and require corrective actions. The short duration of the contract (105 days) also presents a risk of disruption if a follow-on contract is not secured promptly, potentially impacting borrower services. Furthermore, ensuring data security and privacy for sensitive borrower information is a constant risk in any contract involving financial data management.
How effective are loan consolidation and Title IV aid servicing in supporting student access to higher education?
Loan consolidation and Title IV aid servicing are fundamental to the effective operation of federal student financial aid programs, directly supporting student access to higher education. Loan consolidation allows borrowers to combine multiple federal student loans into a single loan, often with a fixed interest rate and a simplified repayment schedule, making repayment more manageable and reducing the likelihood of default. Title IV aid servicing encompasses the administration of grants, loans, and work-study programs authorized by Title IV of the Higher Education Act, ensuring that funds are disbursed correctly, tracked, and managed throughout the student's academic career and repayment period. Effective servicing ensures that students can access the financial resources they need to enroll and persist in higher education, and that the federal investment in student aid is managed responsibly.
What are the historical spending patterns for loan servicing contracts at the Department of Education?
The Department of Education has historically allocated significant funding towards student loan servicing contracts. Spending in this area has fluctuated over the years, influenced by legislative changes, the volume of federal student loan debt, and the number of active borrowers. Major servicers like Navient (and its predecessor Sallie Mae), Nelnet, and MOHELA have consistently received substantial contracts. Spending patterns reflect the ongoing need to manage a massive portfolio of federal student loans, encompassing origination, servicing, repayment, and default management. Recent years have seen increased focus on borrower advocacy and potential reforms to servicing contracts, which may influence future spending allocations and contract structures.
Industry Classification
NAICS: Finance and Insurance › Activities Related to Credit Intermediation › Other Activities Related to Credit Intermediation
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 4
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 123 S JUSTISON ST STE 300, WILMINGTON, DE, 19801
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $83,797,090
Exercised Options: $83,797,090
Current Obligation: $40,994,279
Actual Outlays: $40,994,279
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Parent Contract
Parent Award PIID: EDFSA09D0015
IDV Type: IDC
Timeline
Start Date: 2019-09-01
Current End Date: 2019-12-15
Potential End Date: 2019-12-15 00:00:00
Last Modified: 2021-02-25
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- / Critical Function Idiq: Servicing of Title IV Student Financial AID. Task Order: Servicing of Title IV Student Financial AID, From 9/1/2015 Through 8/31/2016. Provides Funding for Title IV AID Servicing Through Approximately 12/31/2015. Provides Funding for the Delinquency Reduction Compensation Program, in a Not-To-Exceed Amount of $500,000 PER Quarter and $2,000,000 Annually — $141.2M (Department of Education)
- / Critical Function Idiq: Servicing of Title IV Student Financial AID. Task Order: Servicing of Title IV Student Financial AID, From 9/1/2014 Through 8/31/2015. Provides Funding for Title IV AID Servicing and Development and Maintenance, Through Approximately 12/31/2014. Provides Funding for the Delinquency Reduction Compensation Program, in a Not-To-Exceed Amount of $500,000 PER Quarter and $2,000,000 Annually — $133.9M (Department of Education)
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