Department of Education awards $31.8M task order for student loan servicing to Missouri Higher Education Loan Authority

Contract Overview

Contract Amount: $31,847,668 ($31.8M)

Contractor: Missouri Higher Education Loan Authority

Awarding Agency: Department of Education

Start Date: 2024-04-01

End Date: 2026-03-31

Contract Duration: 729 days

Daily Burn Rate: $43.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: OPERATIONS AND MAINTENANCE (O&M) TASK ORDER FOR STUDENT LOAN SERVICING IN ACCORDANCE WITH THE REQUIREMENTS OF THE USDS CONTRACT. ALL WORK AND DELIVERABLES PROVIDED MUST BE IN ACCORDANCE WITH THE REQUIREMENTS OF THE CONTRACT FOR THE TASK ORDER.

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20202

State: District of Columbia Government Spending

Plain-Language Summary

Department of Education obligated $31.8 million to MISSOURI HIGHER EDUCATION LOAN AUTHORITY for work described as: OPERATIONS AND MAINTENANCE (O&M) TASK ORDER FOR STUDENT LOAN SERVICING IN ACCORDANCE WITH THE REQUIREMENTS OF THE USDS CONTRACT. ALL WORK AND DELIVERABLES PROVIDED MUST BE IN ACCORDANCE WITH THE REQUIREMENTS OF THE CONTRACT FOR THE TASK ORDER. Key points: 1. The contract focuses on essential operations and maintenance for student loan servicing. 2. Awarded via full and open competition, suggesting a competitive bidding process. 3. The fixed-price contract with economic price adjustment aims to manage cost fluctuations. 4. The duration of 729 days indicates a medium-term operational requirement. 5. The task order is part of a larger contract for credit intermediation activities. 6. The contractor, Missouri Higher Education Loan Authority, is a key player in student loan programs.

Value Assessment

Rating: good

The awarded amount of $31.8 million over approximately two years for student loan servicing appears reasonable given the scope of operations and maintenance required. Benchmarking against similar large-scale loan servicing contracts is challenging without more specific service metrics, but the fixed-price with economic price adjustment structure suggests an effort to control costs while accounting for potential market shifts. The contractor's established role in higher education finance likely provides efficiencies.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This task order was awarded under full and open competition, indicating that multiple bidders were likely invited to submit proposals. The presence of five bidders (no=5) suggests a healthy level of competition for this student loan servicing requirement. This competitive environment is generally favorable for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: The full and open competition ensures that taxpayer funds are utilized efficiently by fostering a bidding environment that drives down costs and encourages innovative solutions from a wide range of potential providers.

Public Impact

Benefits students and borrowers by ensuring the continuity and efficiency of loan servicing operations. Delivers essential administrative and operational support for federal student loan programs. The geographic impact is national, affecting student loan borrowers across the United States. Supports a workforce involved in loan processing, customer service, and administrative functions related to student loans.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased administrative costs if economic price adjustments are significant.
Reliance on a single task order for a critical function could pose a risk if performance issues arise.
The complexity of student loan servicing requires robust oversight to ensure compliance and accuracy.

Positive Signals

Awarded through full and open competition, indicating a competitive process.
The contractor has experience in higher education loan authority operations.
Fixed-price contract with economic price adjustment provides some cost predictability.

Sector Analysis

This contract falls within the broader financial services and credit intermediation sector, specifically focusing on the administration and servicing of student loans. The market for student loan servicing is significant, involving government agencies, private companies, and non-profit organizations. The Department of Education manages a vast portfolio of federal student loans, making contracts for servicing these loans critical to program operations. Comparable spending benchmarks would involve looking at other large federal contracts for financial services and administrative support.

Small Business Impact

The data indicates that small business participation was not a primary set-aside criterion for this specific task order (ss=false, sb=false). While this task order may not directly involve small business set-asides, the prime contractor, Missouri Higher Education Loan Authority, may engage small businesses as subcontractors for specialized services. The overall impact on the small business ecosystem would depend on the subcontracting opportunities generated by this award.

Oversight & Accountability

Oversight for this task order is likely managed by the Department of Education's contracting officers and program managers. Accountability measures are embedded within the contract terms, requiring adherence to specific performance standards and deliverables. Transparency is facilitated through federal contract databases where such awards are reported. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Federal Student Loan Servicing
Higher Education Programs
Credit Intermediation Services
Department of Education Operations

Risk Flags

Potential for cost increases due to economic price adjustment.
Reliance on a single task order for critical loan servicing functions.
Need for continuous monitoring of contractor performance and compliance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $31.8 million to MISSOURI HIGHER EDUCATION LOAN AUTHORITY. OPERATIONS AND MAINTENANCE (O&M) TASK ORDER FOR STUDENT LOAN SERVICING IN ACCORDANCE WITH THE REQUIREMENTS OF THE USDS CONTRACT. ALL WORK AND DELIVERABLES PROVIDED MUST BE IN ACCORDANCE WITH THE REQUIREMENTS OF THE CONTRACT FOR THE TASK ORDER.

Who is the contractor on this award?

The obligated recipient is MISSOURI HIGHER EDUCATION LOAN AUTHORITY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $31.8 million.

What is the period of performance?

Start: 2024-04-01. End: 2026-03-31.

What is the track record of the Missouri Higher Education Loan Authority (MOHELA) in servicing federal student loans?

The Missouri Higher Education Loan Authority (MOHELA) has a long-standing history of participating in the federal student loan program, primarily as a state-based entity that issues tax-exempt bonds to finance student loans and also serves as a loan servicer. They have been involved in servicing federal loans for many years, often acting as a "special purpose entity" for the state. Their experience includes managing loan origination, repayment, customer service, and default management. MOHELA has previously held significant federal loan servicing contracts, demonstrating their capacity to handle large volumes of loans and complex servicing requirements. Their operational scale and established infrastructure suggest a robust capability to fulfill the requirements of this task order, though specific performance metrics from past federal contracts would provide a more detailed assessment.

How does the awarded amount compare to historical spending on student loan servicing by the Department of Education?

The awarded amount of approximately $31.8 million for this specific task order represents a portion of the Department of Education's overall spending on student loan servicing. The Department contracts with multiple entities to service its vast portfolio of federal student loans, and annual spending can fluctuate significantly based on the number of active loans, servicing contract vehicles, and the specific services required. Historically, the Department has allocated hundreds of millions, and sometimes over a billion dollars annually, for student loan servicing contracts. This $31.8 million task order, covering a period of roughly two years, is a significant but not unprecedented award within the context of the Department's total servicing budget. It reflects a specific operational need for a defined period and scope.

What are the primary risks associated with this student loan servicing contract?

The primary risks associated with this student loan servicing contract include operational failures that could disrupt borrower services, leading to payment errors, missed communications, or difficulties in accessing account information. Data security breaches are a significant concern, given the sensitive personal and financial information handled. Performance degradation by the contractor could lead to non-compliance with federal regulations and contractual obligations, potentially resulting in penalties or the need for corrective actions. Furthermore, the economic price adjustment clause introduces a risk of cost overruns if inflation or market conditions drive up operational expenses beyond initial projections. Ensuring robust oversight and performance monitoring is crucial to mitigate these risks.

How effective is the fixed-price with economic price adjustment (FPEPA) contract type for managing student loan servicing costs?

The Fixed-Price with Economic Price Adjustment (FPEPA) contract type is often used for services where input costs (like labor or overhead) are subject to fluctuation over the contract period. For student loan servicing, this can be beneficial as it allows the contractor to adjust prices based on pre-defined economic indices, protecting them from unexpected cost increases. This can lead to more stable pricing and a willingness of contractors to bid competitively. However, it also introduces a risk for the government that costs could increase significantly if economic conditions are unfavorable. The effectiveness hinges on the clarity and fairness of the economic adjustment formula and the government's ability to monitor and validate these adjustments to ensure they reflect genuine cost changes and not just profit enhancement.

What is the potential impact of this contract on the broader student loan servicing market?

This contract, awarded to the Missouri Higher Education Loan Authority (MOHELA), reinforces the role of established, often quasi-governmental or non-profit entities in the federal student loan servicing landscape. While the Department of Education also contracts with large private sector servicers, awards like this highlight the continued importance of entities like MOHELA. It suggests a market where both private and public/non-profit servicers compete for significant federal contracts. The competition level (five bidders) indicates a dynamic market, but the specific nature of MOHELA's award might influence future bidding strategies and market share distribution among servicers. It also signals the Department's ongoing reliance on experienced servicers to manage its extensive loan portfolio.

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: 5

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 633 SPIRIT DR, CHESTERFIELD, MO, 63005

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

Financial Breakdown

Contract Ceiling: $31,847,668

Exercised Options: $31,847,668

Current Obligation: $31,847,668

Actual Outlays: $62,530,504

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 91003123D0004

IDV Type: IDC

Timeline