Department of Education awards $134M task order to Maximus Education LLC for student loan servicing

Contract Overview

Contract Amount: $134,020,803 ($134.0M)

Contractor: Maximus Education LLC

Awarding Agency: Department of Education

Start Date: 2025-10-01

End Date: 2027-04-01

Contract Duration: 547 days

Daily Burn Rate: $245.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

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.

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Education obligated $134.0 million to MAXIMUS EDUCATION LLC for work described as: OPERATIONS AND MAINTENANCE (O&M) TASK ORDER FOR STUDENT LOAN SERVICING IN ACCORDANCE WITH THE REQUIREMENTS OF THE USDS CONTRACT. Key points: 1. This contract represents a significant investment in student loan servicing operations. 2. The fixed-price structure with economic price adjustment aims to manage cost fluctuations. 3. The award was made under full and open competition, suggesting a competitive bidding process. 4. The duration of the task order extends over 1.5 years, indicating a medium-term operational need. 5. Maximus Education LLC is the sole awardee for this specific task order. 6. The contract falls under 'Other Activities Related to Credit Intermediation', a niche financial service sector.

Value Assessment

Rating: good

The total award amount of $134 million for student loan servicing over approximately 1.5 years appears to be within a reasonable range for such large-scale operations. Benchmarking against similar large federal contracts for financial services and loan administration suggests that the pricing is competitive, especially given the complexity and volume of student loan portfolios. The fixed-price with economic price adjustment (FPEPA) contract type is common for services where input costs can vary, providing a balance between cost control for the government and risk mitigation for the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The presence of 8 bidders suggests a healthy level of competition for this task order. A competitive process like this generally leads to better price discovery and potentially more innovative solutions as contractors vie for the award. The number of bidders indicates that the market for student loan servicing is robust and that multiple firms possess the capabilities to meet the government's requirements.

Taxpayer Impact: A competitive award process ensures that taxpayer dollars are used efficiently by driving down costs and encouraging high-quality service delivery. The multiple bids received suggest that the Department of Education secured a fair market price for these essential student loan servicing functions.

Public Impact

Students with federal loans will benefit from continued and potentially improved servicing operations. The contract ensures the continuity of essential student loan administration, including payment processing, customer support, and account management. The services delivered are critical for the functioning of the federal student aid system. The primary geographic impact is national, affecting student loan borrowers across the United States. The contract supports jobs within the student loan servicing industry, primarily in Virginia where the contractor is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the economic price adjustment clause if market conditions fluctuate unfavorably.
Dependence on a single contractor for a critical function like student loan servicing could pose a risk if performance issues arise.
The complexity of student loan servicing requires robust oversight to ensure compliance and borrower satisfaction.

Positive Signals

Awarded through full and open competition, indicating a competitive market and potentially favorable pricing.
The fixed-price with economic price adjustment contract type offers some cost certainty while allowing for necessary adjustments.
The task order is for a defined period, allowing for re-evaluation of needs and contractor performance at its conclusion.

Sector Analysis

The federal student loan servicing market is a significant segment within the broader financial services and government contracting sectors. This contract falls under the 'Other Activities Related to Credit Intermediation' NAICS code, which encompasses a range of financial services. The total federal spending on student loan servicing can fluctuate based on program needs and contract vehicles, but it represents billions of dollars annually. This specific task order is a component of the Department of Education's larger strategy to manage its student loan portfolio effectively.

Small Business Impact

This contract was awarded to Maximus Education LLC and does not appear to have a specific small business set-aside. There is no explicit information provided regarding subcontracting plans for small businesses within this task order. Therefore, the direct impact on the small business ecosystem is likely minimal unless Maximus Education LLC voluntarily engages small businesses for subcontracting opportunities.

Oversight & Accountability

Oversight for this contract will be primarily managed by the Department of Education's contracting officers and program managers. Accountability measures are embedded within the contract's performance standards and reporting requirements. Transparency is facilitated through federal contract databases like FPDS. While specific Inspector General (IG) jurisdiction for this particular task order isn't detailed, the Department of Education's Office of Inspector General generally has oversight over departmental contracts and programs to detect and prevent fraud, waste, and abuse.

Related Government Programs

Federal Student Loan Servicing Contracts
Department of Education Operations and Maintenance Contracts
Credit Intermediation Services
Federal Financial Services Contracts
Student Aid Administration

Risk Flags

Potential for cost escalation due to economic price adjustment.
Dependence on a single contractor for critical loan servicing functions.
Need for robust oversight to ensure borrower protection and compliance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $134.0 million to MAXIMUS EDUCATION LLC. OPERATIONS AND MAINTENANCE (O&M) TASK ORDER FOR STUDENT LOAN SERVICING IN ACCORDANCE WITH THE REQUIREMENTS OF THE USDS CONTRACT.

Who is the contractor on this award?

The obligated recipient is MAXIMUS EDUCATION LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $134.0 million.

What is the period of performance?

Start: 2025-10-01. End: 2027-04-01.

What is the historical spending pattern for student loan servicing by the Department of Education?

The Department of Education has historically spent billions of dollars on student loan servicing contracts. This spending fluctuates based on the volume of federal student loans, the number of borrowers, and the specific servicing functions required. Over the past decade, the department has utilized various contract vehicles and awardees to manage its vast portfolio. Recent trends indicate a focus on consolidating servicing functions and ensuring efficient, borrower-centric operations. The current award of $134 million for a 1.5-year task order is consistent with the scale of operations required to manage millions of federal student loans, reflecting ongoing significant investment in this area.

How does the performance of Maximus Education LLC on previous contracts compare to industry benchmarks?

Maximus Education LLC has a significant track record in government contracting, including extensive experience in health and human services, and has been involved in student loan servicing. A comprehensive comparison of their performance on similar contracts would require detailed analysis of past performance evaluations, contract award histories, and any documented issues or commendations. Generally, large contractors like Maximus are subject to performance metrics and feedback mechanisms. Benchmarking would involve assessing their on-time payment processing rates, borrower inquiry resolution times, compliance adherence, and overall customer satisfaction scores against industry standards and competitors. Without specific performance data for this exact task, a definitive comparison is challenging, but their established presence suggests a capacity to meet federal requirements.

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

Key risks include operational disruptions that could impact borrowers' ability to manage their loans, data security breaches given the sensitive financial information handled, and potential non-compliance with evolving federal regulations. There's also a risk related to the economic price adjustment clause, which could lead to costs exceeding initial projections if inflation is higher than anticipated. Furthermore, reliance on a single contractor for a critical function like loan servicing presents a concentration risk; any significant performance degradation by Maximus could have widespread negative consequences for borrowers and the Department of Education's program integrity.

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

The FPEPA contract type is often employed for long-term service contracts where the cost of labor and other inputs are subject to market fluctuations. For student loan servicing, this means that if the cost of labor, technology, or other operational expenses increases due to inflation or other economic factors, the contract price can be adjusted accordingly. This provides a degree of cost certainty for the government by setting a baseline price while protecting the contractor from unforeseen economic hardships that could otherwise lead to contract disputes or performance issues. The effectiveness hinges on the clarity of the economic adjustment formula and robust government oversight to ensure adjustments are justified and reasonable.

What is the potential impact of this contract on the federal student loan portfolio's overall health?

This contract is crucial for the day-to-day management of the federal student loan portfolio. Effective servicing ensures that borrowers receive accurate information, can make payments easily, and are aware of repayment options, which can positively impact loan repayment rates and reduce delinquency and default. Conversely, inefficient or ineffective servicing could lead to borrower dissatisfaction, increased defaults, and reputational damage to the federal student aid programs. The continuity provided by this task order aims to maintain stability and support the financial well-being of millions of borrowers.

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: 8

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

Evaluated Preference: NONE

Contractor Details

Address: 1891 METRO CENTER DR, RESTON, VA, 20190

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $136,420,803

Exercised Options: $134,020,803

Current Obligation: $134,020,803

Actual Outlays: $95,402,992

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 91003123D0001

IDV Type: IDC

Timeline