This call for public comment presents an opportunity for institutions of higher education and other stakeholders to voice their concerns and share ideas for improving the direct loan servicing process.
On September 8, 2025, the U.S. Department of Education published an announcement in the Federal Register requesting information from stakeholders on developing and implementing a "common manual" for the William D. Ford Direct Loan Program. According to the announcement, this effort is intended to promote consistency, transparency and effectiveness across all post-disbursement servicing and collections functions and will be modeled on the Common Manual for the Federal Family Education Loan Program. This call for public comment presents an opportunity for institutions of higher education and other stakeholders to voice their concerns and share ideas for improving the direct loan servicing process. For example, given growing concerns about anticipated spikes in cohort default rates, institutions and other stakeholders have an opportunity to advocate for stronger default prevention activities by direct loan servicers.
The Department manages the direct loan program. The Department's Office of Federal Student Aid (FSA) is the lender for direct loans, and FSA contracts with multiple student loan servicers to administer the loans and provide customer service to borrowers.
Federal loan servicers are an important piece of the direct loan repayment process and a line of defense in preventing borrower default. However, the current servicer contracts are performance-based and allow servicers flexibility in the way they meet Department objectives. There is no set of prescriptive standards, which results in inconsistency. Additionally, the current compensation structure for servicers does not provide incentives for prioritizing working with late-stage delinquent borrowers to prevent default.
Comments must be submitted via the federal eRulemaking Portal at regulations.gov. Note that when first published, the notice included an incorrect docket number. The correct docket number is ED-2025-FSA-0713. Comments are due by 4:59 p.m. on October 8, 2025.
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