More Details Emerge On Department of Ed. Servicing Contract

The Department of Education added several new amendments to the Title IV servicing contract bid website.  On Friday, I posted the Q&A regarding how the Department plans to allocate volumes to the selected servicers.  The most recent amendment also provides details on the pricing schematic that the Department would like to have the six finalists complete (Sallie Mae, Nelnet, ACS, AES/PHEAA, Wells Fargo, Great Lakes):  Download ServicingPricingModel v6

Here are the six borrower statuses that the servicers are expected to provide pricing information on (the previous proposal had 7 categories with Borrowers in Default not appearing in the latest version):

• Borrowers in In-school Status
• Borrowers in Grace or Current Repayment Status
• Borrowers in Deferment or Forbearance
• Borrowers 31-150 Days Delinquent
• Borrowers 151-270 Days Delinquent
• Borrowers 271+ Days Delinquent

The bid documents also make clear that the "borrowers in grace or current repayment status" will be the most highly compensated one in order to encourage servicers to focus on default prevention:

Keep in mind that this is a performance-based acquisition, aimed at maintaining borrowers in grace or current repayment status. In an effort to motivate offerors to maintain borrowers in grace or current repayment status, this borrower category represents the highest per unit price the Government expects to pay, regardless of costs to the offeror for servicing accounts in delinquent or default status.