Department of Education awards $180M for student financial aid servicing, extending existing contract

Contract Overview

Contract Amount: $180,072,901 ($180.1M)

Contractor: Great Lakes Educational Loan Services, Inc

Awarding Agency: Department of Education

Start Date: 2018-09-01

End Date: 2019-08-31

Contract Duration: 364 days

Daily Burn Rate: $494.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: BASE AWARD: SERVICING OF TITLE IV STUDENT FINANCIAL AID, IN ACCORDANCE WITH SECTION 2212 OF THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (PUB.L. 111-152, 124 STAT. 1029) FOR THE PERIOD OF 6/17/2014 TO 6/16/2019. TASK ORDER: SERVICING OF TITLE IV STUDENT FINANCIAL AID IN ACCORDANCE WITH SECTION 2212 OF THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (PUB.L.111-152, 124 STAT. 1029) FOR THE PERIOD OF 09/01/2018 TO 08/31/2019. THIS TASK ORDER ALSO SERVES TO PROVIDE FUNDING UNDER CONTRACT ED-FSA-09-D-0012 FOR TITLE IV AID SERVICING THROUGH APPROXIMATELY 12/31/2018.

Place of Performance

Location: ANN ARBOR, WASHTENAW County, MICHIGAN, 48108

State: Michigan Government Spending

Plain-Language Summary

Department of Education obligated $180.1 million to GREAT LAKES EDUCATIONAL LOAN SERVICES, INC for work described as: BASE AWARD: SERVICING OF TITLE IV STUDENT FINANCIAL AID, IN ACCORDANCE WITH SECTION 2212 OF THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (PUB.L. 111-152, 124 STAT. 1029) FOR THE PERIOD OF 6/17/2014 TO 6/16/2019. TASK ORDER: SERVICING OF TITLE IV STUDENT FINANCIAL AID… Key points: 1. Contract focuses on servicing Title IV student financial aid, a critical function for federal student loan programs. 2. The award represents a significant investment in the infrastructure supporting student loan administration. 3. Competition dynamics for this contract are important for ensuring efficient and cost-effective student aid delivery. 4. Performance context suggests a continuation of services rather than a new program initiation. 5. The sector involves financial services and government administration of educational funding. 6. Risk indicators may include data security, compliance with regulations, and the contractor's ability to handle volume.

Value Assessment

Rating: good

The base award of $180,007,290.14 for student financial aid servicing over a five-year period (2014-2019) indicates a substantial but potentially reasonable cost for managing complex federal programs. The task order for 2018-2019, valued at approximately $180M, suggests a significant portion of the base award was utilized or extended. Benchmarking against similar large-scale federal loan servicing contracts would provide a clearer picture of value for money, but the scale implies a need for robust operational capacity.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple bidders likely vied for this significant opportunity. This competitive process is designed to foster price discovery and encourage contractors to offer their best terms. The presence of four bidders (no) indicates a healthy level of interest and competition, which generally benefits the government by driving down costs and improving service quality.

Taxpayer Impact: A full and open competition for a contract of this magnitude helps ensure that taxpayer dollars are used efficiently by leveraging market forces to secure competitive pricing and high-quality services.

Public Impact

Benefits millions of students and borrowers by ensuring the proper servicing of their federal student loans. Delivers essential administrative services for Title IV federal student financial aid programs. Impacts the financial education sector by supporting the flow of funds for higher education. Supports a workforce involved in loan servicing, customer support, and administrative functions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for data breaches given the sensitive financial information handled.
Risk of non-compliance with evolving federal regulations governing student aid.
Dependence on a single contractor for a critical government function could pose continuity risks if not managed properly.

Positive Signals

Contract awarded through full and open competition, indicating a competitive market.
The contractor has a history of servicing federal student aid, suggesting established expertise.
The contract structure likely includes performance metrics and oversight to ensure service quality.

Sector Analysis

The federal student financial aid servicing sector is a crucial component of the U.S. higher education system, involving billions of dollars in federal loans. This contract falls within the broader financial services and government administration categories. Comparable spending benchmarks would involve other large federal contracts for loan servicing, debt collection, or large-scale administrative processing, which often run into hundreds of millions of dollars over several years.

Small Business Impact

The provided data does not indicate any specific small business set-asides or subcontracting requirements for this contract. As a large-scale federal contract, it is possible that subcontracting opportunities may exist, but their extent and impact on the small business ecosystem are not detailed here. Further analysis would be needed to determine if small businesses are involved in supporting the prime contractor.

Oversight & Accountability

Oversight for this contract is likely managed by the Department of Education's program offices responsible for student financial assistance. Accountability measures would typically be embedded within the contract's performance standards, service level agreements, and reporting requirements. Transparency is generally facilitated through contract databases and public reporting, though specific operational details may be sensitive.

Related Government Programs

Federal Student Loan Program Administration
Department of Education IT and Administrative Services
Credit Intermediation Services
Federal Debt Servicing Contracts

Risk Flags

Potential for data security vulnerabilities
Regulatory compliance risks
Contractor performance variability
Dependence on incumbent contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $180.1 million to GREAT LAKES EDUCATIONAL LOAN SERVICES, INC. BASE AWARD: SERVICING OF TITLE IV STUDENT FINANCIAL AID, IN ACCORDANCE WITH SECTION 2212 OF THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (PUB.L. 111-152, 124 STAT. 1029) FOR THE PERIOD OF 6/17/2014 TO 6/16/2019. TASK ORDER: SERVICING OF TITLE IV STUDENT FINANCIAL AID IN ACCORDANCE WITH SECTION 2212 OF THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (PUB.L.111-152, 124 STAT. 1029) FOR THE PERIOD OF 09/01/2018 TO 08/31/2019. THIS TASK ORDER ALSO SERVES TO PROVIDE FUNDING UND

Who is the contractor on this award?

The obligated recipient is GREAT LAKES EDUCATIONAL LOAN SERVICES, INC.

Which agency awarded this contract?

Awarding agency: Department of Education (Department of Education).

What is the total obligated amount?

The obligated amount is $180.1 million.

What is the period of performance?

Start: 2018-09-01. End: 2019-08-31.

What is the historical spending trend for student financial aid servicing by the Department of Education?

Historical spending on student financial aid servicing by the Department of Education has been substantial, reflecting the scale of federal student loan programs. While specific year-over-year figures for this particular contract (ED-FSA-09-D-0012) are not fully detailed in the provided snippet, the base award of approximately $180 million over five years (2014-2019) suggests a consistent and significant investment. This level of spending is typical for contracts managing millions of student accounts, processing payments, and providing borrower support. The Department has historically relied on large contracts to manage these complex operations, with spending fluctuating based on program needs, legislative changes, and contract renewals. Analyzing broader departmental budgets and contract awards for loan servicing over the past decade would reveal trends in outsourcing these critical functions and the associated financial commitments.

How does the contractor's performance on this contract compare to industry benchmarks for loan servicing?

Assessing the contractor's performance against industry benchmarks requires access to detailed performance metrics, such as call center wait times, resolution rates, borrower satisfaction scores, and compliance audit results, which are not provided in the summary data. However, the fact that the contract was awarded under full and open competition and has been in place for several years suggests a baseline level of acceptable performance. Great Lakes Educational Loan Services, Inc. is a known entity in the student loan servicing space. To conduct a thorough comparison, one would need to examine the specific Service Level Agreements (SLAs) within the contract and compare the contractor's reported outcomes against industry standards for key performance indicators (KPIs) in areas like delinquency management, default prevention, and customer service efficiency. Publicly available reports from the Department of Education or independent reviews, if they exist, would be crucial for this analysis.

What are the primary risks associated with servicing federal student financial aid, and how are they mitigated in this contract?

The primary risks associated with servicing federal student financial aid include data security and privacy breaches (handling sensitive PII and financial data), regulatory non-compliance (navigating complex and changing federal laws), operational disruptions (ensuring continuous service availability), and financial mismanagement. Mitigation strategies typically embedded in such contracts involve stringent data security protocols, regular compliance audits, robust business continuity and disaster recovery plans, clear performance standards, and penalties for non-performance. The Department of Education would also maintain oversight through regular reporting requirements and performance reviews. The contract's fixed-price nature may also incentivize cost control, though it could shift some risk to the contractor if costs exceed projections. The scale of the award suggests that significant resources are allocated to managing these risks.

What is the total value of federal contracts awarded to Great Lakes Educational Loan Services, Inc. over the past five years?

To determine the total value of federal contracts awarded to Great Lakes Educational Loan Services, Inc. over the past five years, a comprehensive search of federal procurement databases such as FPDS-NG (Federal Procurement Data System - Next Generation) or USAspending.gov would be necessary. The provided data snippet only details one specific contract (ED-FSA-09-D-0012) with a base award of approximately $180 million for the period of 2014-2019, and a task order extending through August 2019. This single contract represents a significant portion of their federal business during that period. However, the company may hold other contracts with the Department of Education or other federal agencies for different services. A full analysis would require aggregating all contract awards to this entity within the specified timeframe to understand their overall federal footprint and revenue from government work.

How does the competition level (4 bidders) for this contract impact pricing and service quality?

A competition level of four bidders for a contract of this magnitude generally indicates a healthy and competitive market for federal student financial aid servicing. With multiple capable firms vying for the award, the Department of Education is better positioned to negotiate favorable pricing and secure high-quality services. The presence of several bidders typically drives down costs as companies compete on price and offer innovative solutions to win the contract. Furthermore, a competitive environment encourages contractors to maintain high performance standards throughout the contract period to ensure future contract awards and maintain their market position. If competition were limited (e.g., sole-source or very few bidders), there would be a higher risk of inflated prices and potentially less incentive for the contractor to excel in service delivery.

Industry Classification

NAICS: Finance and Insurance › Activities Related to Credit Intermediation › Other Activities Related to Credit Intermediation

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Nelnet, Inc. (UEI: 134960447)

Address: 2401 INTERNATIONAL LN, MADISON, WI, 53704

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $237,253,306

Exercised Options: $237,253,306

Current Obligation: $180,072,901

Actual Outlays: $266,408

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: EDFSA09D0012

IDV Type: IDC

Timeline