II 

118TH CONGRESS 

2D SESSION S. 4481 

To strengthen requirements for contracts between the Department of 

Education and Federal student loan servicers, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 5, 2024 

Mr. WYDEN (for himself, Ms. KLOBUCHAR, Mr. VAN HOLLEN, and Mr. 

PADILLA) introduced the following bill; which was read twice and referred 

to the Committee on Health, Education, Labor, and Pensions 

A BILL 

To strengthen requirements for contracts between the Department of Education and Federal student loan 

servicers, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Student Loan 

5 Servicers Accountability Act of 2024’’. 


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1 SEC. 2. CONTRACT REQUIREMENTS FOR FEDERAL STU2 DENT LOAN SERVICERS. 

3 (a) IN GENERAL.—Part G of title IV of the Higher 

4 Education Act of 1965 (20 U.S.C. 1088 et seq.) is amend5 ed by adding at the end the following: 

6 ‘‘SEC. 494A. CONTRACT REQUIREMENTS FOR FEDERAL STU7 DENT LOAN SERVICERS. 

8 ‘‘(a) ENHANCED VETTING.—Before entering into a 

9 contract or other agreement with a Federal student loan 

10 servicer for the servicing of Federal student loans, the Sec11 retary shall evaluate the following factors: 

12 ‘‘(1) In the case of a servicer that has pre13 viously serviced Federal student loans, the past per14 formance of the servicer compared to all Federal 

15 student loan servicers, including— 

16 ‘‘(A) the levels of consumer satisfaction re17 ported with respect to such servicer; and 

18 ‘‘(B) the quality of customer service prac19 tices and the demonstrated ability of the 

20 servicer to prevent errors and disruptions in 

21 services in the event a Federal student loan is 

22 transferred to or from the servicer, as measured 

23 by— 

24 ‘‘(i) the service level methodology per25 formance metrics and servicer allocation 

26 metrics issued by the Office of Federal 


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1 Student Aid of the Department (or any 

2 successor metrics); and 

3 ‘‘(ii) any other quantitative or quali4 tative factors the Secretary determines ap5 propriate for analysis. 

6 ‘‘(2) In the case of a servicer that has not pre7 viously serviced Federal student loans, the past per8 formance of the servicer compared to other similarly 

9 situated servicers, including— 

10 ‘‘(A) the levels of consumer satisfaction re11 ported with respect to such servicer; and 

12 ‘‘(B) the quality of customer service prac13 tices and the demonstrated ability of the 

14 servicer to prevent errors and disruptions in 

15 services in the event a student loan is trans16 ferred to or from the servicer, as measured by 

17 any quantitative or qualitative factors the Sec18 retary determines appropriate for analysis. 

19 ‘‘(3) Any penalties or other punitive measures 

20 previously imposed on the servicer by the Depart21 ment as a result of the servicer’s misconduct, failure 

22 to adequately support borrowers, or inability to meet 

23 the terms and conditions of a servicing agreement 

24 with the Department. 


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1 ‘‘(4) Any legal action previously taken against 

2 the servicer, including any legal action taken by a 

3 State. 

4 ‘‘(5) The ability of the servicer to capture nec5 essary data regarding borrowers and the eligible 

6 Federal student loans held by borrowers in the event 

7 such loans are transferred to the servicer, including 

8 the ability of the servicer to gather all information 

9 related to the repayment history of a borrower and 

10 relevant consumer demographic data prior to serv11 icing such loans. 

12 ‘‘(6) The ability of the servicer to provide tar13 geted services, including personalized counseling and 

14 other high-quality services, for borrowers most at 

15 risk of default and delinquency, including borrowers 

16 who have previously defaulted. 

17 ‘‘(7) The demonstrated ability of the servicer— 

18 ‘‘(A) to support borrowers from tradition19 ally underrepresented communities by providing 

20 information through the forms described in sub21 section (f) and through automatic website 

22 translation, and services in multiple languages 

23 (including Spanish, Mandarin, Haitian Creole, 

24 Arabic, and other languages); and 


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1 ‘‘(B) to provide appropriate access and 

2 support for borrowers with disabilities. 

3 ‘‘(b) REQUIRED CONTRACT TERMS.—As part of any 

4 contract or other agreement between the Department and 

5 a Federal student loan servicer, the servicer shall agree 

6 to the following terms: 

7 ‘‘(1) The servicer shall place a borrower’s loans 

8 into an administrative forbearance, during which in9 terest shall not accrue, during any period in which 

10 the servicer has identified a servicer error but has 

11 not yet corrected the error. 

12 ‘‘(2) For a borrower who has submitted a cer13 tification of the borrower’s employment status or in14 come for purposes of the public service loan forgive15 ness program under section 455(m) or an income16 driven repayment plan, respectively, the servicer 

17 shall provide credit toward loan forgiveness under 

18 that program or plan for— 

19 ‘‘(A) any period during which the bor20 rower— 

21 ‘‘(i) was in administrative forbearance 

22 due to a servicer error as described in 

23 paragraph (1); and 


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1 ‘‘(ii) would have otherwise qualified 

2 for credit toward forgiveness if not for 

3 such forbearance; or 

4 ‘‘(B) any other period during which the 

5 borrower would have qualified for credit toward 

6 forgiveness if not for a servicer error. 

7 ‘‘(3) The servicer shall provide appropriate rem8 edies to a borrower in the event a servicer error re9 sults in financial harm to the borrower (as deter10 mined by the Secretary), including— 

11 ‘‘(A) refunding overpayments on a loan 

12 made due to a servicer error; 

13 ‘‘(B) reimbursing a borrower for fees and 

14 other expenses, such as insufficient funds fees, 

15 incurred by the borrower as a result of a 

16 servicer error; and 

17 ‘‘(C) such other remedies as the Secretary 

18 determines appropriate. 

19 ‘‘(4) The servicer shall ensure that credit re20 porting agencies remove delinquencies or other nega21 tive information from the credit reports of a bor22 rower if the negative credit information was a result 

23 of an error by the servicer. 

24 ‘‘(5) The servicer shall maintain all records con25 cerning the account of a borrower— 


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1 ‘‘(A) for the period during which the 

2 servicer services any loan of the borrower; and 

3 ‘‘(B) for a period of not less than 3 years 

4 after— 

5 ‘‘(i) the loans of a borrower have been 

6 paid in full, discharged, or assigned to col7 lection; 

8 ‘‘(ii) the account has been transferred 

9 to another servicer; or 

10 ‘‘(iii) the servicer otherwise ceases the 

11 servicing of such loans. 

12 ‘‘(6) The servicer shall abide by any decision of 

13 the Secretary to revoke the contract in accordance 

14 with subsection (e). 

15 ‘‘(c) APPLICABILITY.— 

16 ‘‘(1) CONTRACTS COVERED.—Subsections (a) 

17 and (b) shall apply with respect to contracts and 

18 other agreements entered into on or after the date 

19 that is 90 days after the date of enactment of the 

20 Student Loan Servicers Accountability Act of 2024. 

21 ‘‘(2) SPECIAL RULE.—The requirements of 

22 paragraphs (1) through (5) of subsection (b) shall 

23 apply to the actions of the Department in directly 

24 administering the public service loan forgiveness pro25 gram under section 455(m), income-driven repayVerDate Sep 11 2014 20:39 Jul 26, 2024 Jkt 049200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4481.IS S4481

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1 ment plans, and other forgiveness and repayment 

2 programs authorized under this Act in the same 

3 manner as such requirements apply to Federal stu4 dent loan servicers. 

5 ‘‘(d) REVIEW OF LEGACY CONTRACTS.—Not later 

6 than 180 days after the date of enactment of the Student 

7 Loan Servicers Accountability Act of 2024, the Secretary 

8 shall conduct a review of all legacy student loan servicing 

9 contracts to determine whether such contracts, and the 

10 Federal student loan servicers providing services under 

11 such contracts, align with the requirements set forth in 

12 subsections (a) and (b). The Secretary shall use the re13 sults of such review to inform any decision of the Sec14 retary to continue or renew such a contract. 

15 ‘‘(e) REVOCATION.— 

16 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

17 the Secretary may revoke a contract or other agree18 ment between the Department and a covered 

19 servicer or vendor if the Secretary determines that 

20 the covered servicer or vendor knowingly withheld in21 formation or made misrepresentations to the De22 partment in connection with the vetting process de23 scribed in subsection (a) or any element of a con24 tract entered into under subsection (b). 


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1 ‘‘(2) NOTICE.—In the event the Secretary de2 termines that a covered servicer or vendor described 

3 in paragraph (1) withheld information or made mis4 representations as described in such paragraph, the 

5 Secretary shall provide the covered servicer or ven6 dor (as the case may be) with reasonable notice of 

7 such determination and an opportunity for a hearing 

8 before making taking final action to revoke the con9 tract or other agreement concerned. 

10 ‘‘(f) INFORMATION IN MULTIPLE LANGUAGES.—The 

11 Secretary and the Director of the Office of Management 

12 and Budget shall ensure that forms and other information 

13 relating the rights of borrowers under this section are 

14 made available in multiple languages (including Spanish, 

15 Mandarin, Haitian Creole, Arabic, and other languages) 

16 and are accessible to borrowers with disabilities. 

17 ‘‘(g) REPORT TO CONGRESS.—Not later than 1 year 

18 after the date of enactment of the Student Loan Servicers 

19 Accountability Act of 2024, and on an annual basis there20 after, the Secretary shall submit to Congress a report that 

21 evaluates the status of compliance with this section, in22 cluding the compliance of— 

23 ‘‘(1) the Department; and 

24 ‘‘(2) covered servicers and vendors. 

25 ‘‘(h) DEFINITIONS.—In this section: 


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1 ‘‘(1) COVERED SERVICER OR VENDOR.—The 

2 term ‘covered servicer or vendor’ includes— 

3 ‘‘(A) a Federal student loan servicer; 

4 ‘‘(B) a vendor in the Unified Servicing and 

5 Data Solution system; 

6 ‘‘(C) a business process operation vendor; 

7 and 

8 ‘‘(D) a vendor or servicer as designated by 

9 the Secretary. 

10 ‘‘(2) FEDERAL STUDENT LOAN.—The term 

11 ‘Federal student loan’ means a loan made under 

12 part B, D, or E that is held by the Department. 

13 ‘‘(3) FEDERAL STUDENT LOAN SERVICER.— 

14 The term ‘Federal student loan servicer’ means any 

15 individual, State, or private, for-profit or nonprofit 

16 organization, which enters into, or seeks to enter 

17 into, a contract with the Secretary to administer, 

18 through either manual or automated processing, any 

19 aspect of a Federal student loan program, including 

20 monitoring, processing, servicing, or collecting loans. 

21 ‘‘(4) LEGACY STUDENT LOAN SERVICING CON22 TRACT.—The term ‘legacy student loan servicing 

23 contract’ means a contract between the Department 

24 and a Federal student loan servicer that— 


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1 ‘‘(A) was entered into before the date that 

2 is 90 days after the date of enactment of the 

3 Student Loan Servicers Accountability Act of 

4 2024; and 

5 ‘‘(B) was in effect as of such date.’’. 

6 (b) CONFORMING AMENDMENT TO PSLF.—Section 

7 455(m) of the Higher Education Act of 1965 (20 U.S.C. 

8 1087e(m)) is amended by adding at the end the following: 

9 ‘‘(5) TREATMENT OF CERTAIN PERIODS OF

10 FORBEARANCE.—Each month during which an eligi11 ble Federal Direct Loan is in an administrative for12 bearance described in section 494A(b)(1) shall be 

13 treated as a qualifying payment counted for pur14 poses of paragraph (1)(A), regardless of whether the 

15 borrower made a payment on such loan during such 

16 period.’’. 

17 SEC. 3. COMPTROLLER GENERAL STUDY AND REPORT. 

18 (a) STUDY.—The Comptroller General of the United 

19 States shall conduct a study— 

20 (1) to determine how and to what extent the 

21 transfer of Federal student loans to Federal student 

22 loan servicers leads to disruptions in repayment or 

23 servicer errors that affect the credit ratings of bor24 rowers of such loans, which shall include evaluation 

25 of— 


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1 (A) negative effects resulting from a 

2 servicer’s failure to maintain accurate, up-to3 date information on the status of a borrower’s 

4 account; 

5 (B) the root causes of such failures, such 

6 as errors caused by a lack of compatibility be7 tween the information technology systems of 

8 different Federal student loans servicers; and 

9 (C) how such failures impact borrowers, 

10 such as by presenting borrowers with inaccurate 

11 account balances, inaccurate or incomplete pay12 ment histories, and miscalculated monthly pay13 ment amounts; 

14 (2) to develop, in consultation with the Director 

15 of the Bureau of Consumer Financial Protection, 

16 recommendations to assist the Department of Edu17 cation in mitigating any negative effects of such 

18 transfers on the credit ratings of borrowers; 

19 (3) to determine how and to what extent serv20 icing errors, servicer noncompliance with State or 

21 Federal requirements, or servicer failure to provide 

22 timely and accurate information to borrowers nega23 tively impacts the credit scores of borrowers or oth24 erwise results in harm to borrowers; 


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1 (4) to assess the effectiveness of the processes 

2 used by servicers to receive and respond to consumer 

3 complaints, including— 

4 (A) servicer requirements regarding how 

5 complaints can be filed; and 

6 (B) servicer processes for tracking, inves7 tigating, resolving, and addressing the root 

8 causes of consumer complaints, including com9 plaints submitted through the websites and 

10 feedback systems of the Department of Edu11 cation; and 

12 (5) to determine how the Unified Servicing and 

13 Data Solution will effectively address errors and 

14 other issues arising from the transfer of Federal stu15 dent loans to and from different servicers. 

16 (b) COMPTROLLER GENERAL REPORT.—Not later 

17 than two years after the date of the enactment of this Act, 

18 the Comptroller General shall submit to the appropriate 

19 congressional committees a report on the results of the 

20 study conducted under subsection (a). 

21 (c) DEFINITIONS.—In this section: 

22 (1) APPROPRIATE CONGRESSIONAL COMMIT23 TEES.—The term ‘‘appropriate congressional com24 mittees’’ means— 


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1 (A) the Committee on Health, Education, 

2 Labor, and Pensions of the Senate; and 

3 (B) the Committee on Education and the 

4 Workforce of the House of Representatives. 

5 (2) FEDERAL STUDENT LOAN; FEDERAL STU6 DENT LOAN SERVICER.—The terms ‘‘Federal stu7 dent loan’’ and ‘‘Federal student loan servicer’’ have 

8 the meanings given those terms in section 494A of 

9 the Higher Education Act of 1965 (as added by sec10 tion 2 of this Act). 

Æ 


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