Sallie Mae wins chance to bid to service loans under ECASLA
Students, schools, and taxpayers will benefit from the U.S. Department of Education’s recent decision to use an open, competitive bidding process to service new loan volume that could potentially be sold to the government under the Ensuring Continued Access to Student Loans Act (ECASLA).
On August 21, 2008, Sallie Mae filed a bid protest with the U.S. General Accountability Office challenging the U.S. Department of Education’s decision to use Affiliated Computer Services, Inc. (ACS) on a no-bid, sole source basis to service all FFELP loans sold to the government under ECASLA.
The protest filed by Sallie Mae asked for two possible remedies: that the Department of Education be required to either
- maintain servicing rights with the originating lender if that lender decided to sell loans to the government, or
- use an open, competitive bidding process to determine which FFELP servicers are best capable to service these new FFELP loans.
In response, the Department of Education wrote to the General Accountability Office on Oct. 16, 2008 announcing it would take “Corrective Action” by “issu[ing] a solicitation for contractor support to service student loans purchased by the Department.” The letter continued: “Accordingly, the Department respectfully requests that this protest be dismissed as academic,” meaning that there was no longer a need for the GAO to grant Sallie Mae’s official protest. In response to the corrective action taken by the Department, GAO denied the protest on Nov. 21, in large part because one of the specific remedies requested in the protest was now being implemented.
In a Dec. 8 Wall Street Journal article, Sallie Mae senior vice president Tom Joyce said, “We’re pleased the Department of Education has stated its intent to use a competitive bidding process to handle new loan volume. We hope this process is initiated without delay in order to prioritize the best interests of students, schools and taxpayers.”
On Dec. 9, 2008 the Department of Education issued an official pre-solicitation notice announcing that the competitive bidding process would begin in the next 30 days, which is faster than the original timeframe outlined in the Department’s Oct. 16 letter to the GAO.
Sallie Mae is pleased that the Department is moving forward without delay ahead of the schedule they originally proposed. As the most efficient and largest student loan originator and servicer, committed to our mission of expanding college access, we plan to use this opportunity to leverage all of our industry-leading operational capacity and default prevention activities for students, schools, and taxpayers.
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