ACS Back In The DL Servicing Game? (Update)

Update:  A reliable industry source believes that ACS had been servicing purchased FFEL loans before the four servicers were up and running which explains why they appear on this list.  After September 1, however, it is expected that they would not be receiving any new originations unless of course, their bid protests were upheld.  An earlier version of the post included the headline "You Betcha."  

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Remember the initial shock and surprise when the incumbent direct loan servicer, ACS, didn't make the short list when the Dept. of Education selected the four DL servicers (AES/PHEAA, Great Lakes, Nelnet and Sallie Mae) earlier this summer?  That was followed by a few weeks of wondering what went wrong.  Then I came across the three protests that ACS had lodged through the GAO's office, none of which has been resolved as of this afternoon, according to the GAO Protest Docket. 

So, what has changed?  Well, on the Department of Education's IFAP website, was this announcement about the servicing of FFEL loans purchased by the Department.  The announcement mentions that "As explained in that announcement, four new servicers are now part of the team that assists us with loan servicing."  So, imagine my surprise when I looked at the table in the announcement and saw ACS listed as a servicer of these FFEL purchased loans: 

Loan Category	Servicer
Direct Loans	Direct Loan Servicing Center
FFEL Purchased Loans	Department of Education Student Loan Servicing Center (ACS)
FFEL Purchased Loans	FedLoan Servicing (PHEAA)
FFEL Purchased Loans	Great Lakes Educational Loan Services, Inc.
FFEL Purchased Loans	Nelnet
FFEL Purchased Loans	Sallie Mae

It does raise a few questions, only one of which I have answers to (by the way no new updates on the procurement site to explain this either):

• Was a favorable decision reached on one or more of their protests and the Bid Protest site just hasn't been updated yet?
• Is there something in their current DL contract that gives ACS the opportunity to service these loans until their bid to service FFEL purchased loans is officially rejected or approved?
  
  • Updated answer:  Yes.  ACS was servicing loans that had been put to the Department prior to the four servicers coming on board in September.   
• Does their appearance on this list reflect the reality that having five servicers is better than four in reducing implementation risk should the world go DL? 
  
  • As we draw closer to D-Day and a determination of where the industry will be in 2010, implementation risk would diminish if ACS remained in the game given their intimate knowledge of processes and their servicing capacity.
• How are the purchased FFEL loans being allocated?   In public statements, Sallie Mae  indicated that they would continue servicing loans that they had originated to minimize disruption to borrowers but it is not clear about how the remaining loans were divvied up. 
  

Anyone have any more details that I can post? 

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