15 Feb Guaranty Agencies Respond to Requests for Information

By Tanya Tanaro, American Student Assistance

On May 31, 2011 the Department of Education published a federal register announcement which invited guaranty agencies to submit proposals for Voluntary Flexible Agreements (VFA’s) that would allow the agencies to adjust their existing contracts with ED to provide a new range of services to federal student loan borrowers. The proposal process was open to those guaranty agencies that participated in the FFEL program with the Secretary encouraging agencies to submit proposal in partnership with one another. As outlined in the federal register, the goal is to implement cost effective strategies to enhance both the stability and integrity of the FFEL program. Through this process, ED aims to reduce conflict of interest as it relates to organizations providing both default prevention and collection efforts, but maintain some of the best work that guarantee agencies performed under the FFEL Program such as community outreach and debt management.

The Department of Education has publicly displayed the 22 submissions they received and information as it relates to the process on the Financial Partners section of the FSA site, http://www.fp.ed.gov/VFA.html. Negotiations about these proposals should begin in the coming months between the Department of Education and individual guarantee agencies