June 24, 2021

U.S. Department of Education Cancels NextGen Bid

U.S. Department of Education Cancels NextGen Bid

U.S. Department of Education Cancels NextGen Bid

The U.S. Department of Education cancelled a bid solicitation for its Federal Student Aid Next Generation (Next Gen) Financial Services Environment, citing that the company Nelnet Servicing LLC’s proposal is “out of the competitive range” for the program, according to a public statement from the student loan servicer.

Nelnet submitted a bid for the Enhanced Processing Solution (EPS) component of the NextGen contract procurement process, according to the statement. “EPS is the technology system and certain processing functions the department plans to use under NextGen to service the department’s 43 million student loan customers. Nelnet has requested a debriefing by the department and the company intends to file a protest challenging the decision.”

NexGen originated from the Department of Education in 2017 as an update to technology and operational programs that support federal student aid, from borrowers’ applications through the repayment process, according to a department news release.

The statement from Nelnet, published on Yahoo Finance, continues:

“The department’s NextGen contract procurement process is comprised of solicitations, including EPS and Business Process Operations (BPO), which will make up a new framework for the servicing of all of the student loans owned by the Department. BPO is the back office and call center operational functions for servicing the Department’s student loan customers. The company also responded to the BPO component, for which the Department has not yet made an award, and the company cannot predict the timing, nature, or outcome of the BPO component.

“We profoundly disagree with and are very disappointed by the department’s determination that our technical solution for EPS was outside of the competitive range and we intend to protest this decision,” said Jeff Noordhoek, CEO of Nelnet. “We are confident we are uniquely qualified to help the department fulfill its NextGen vision with the experience and best features from two of the best student loan systems for the department over the last 10 years.”

Nelnet and Great Lakes Educational Loan Services Inc. were awarded student loan servicing contracts for loans owned by the department in June 2009, according to the company. These contracts are set to expire on Dec. 14, 2020, although there is the option for two possible six-month extensions through Dec. 14, 2021.

“If the department’s decision stands, Nelnet Servicing and Great Lakes will eventually be required to migrate these portfolios onto another provider’s system after an award is made and the company would ultimately need to restructure the company’s loan servicing segment for long-term success,” according to its statement. “If the company is awarded a BPO contract for operational services, it would mitigate the impact of not being awarded the EPS component.”

ACA International will continue to follow this story.

Meanwhile, as one of the Department of Education’s student loan servicers, Nelnet posted on its website there is relief available to student loan borrowers, including those in default, as a result of the CARES Act stimulus package related to COVID-19.

The relief includes 0% percent interest rates and a suspension of payments for six months. Student loan borrowers are directed to contact their student loan servicer to discuss options.

Visit ACA’s COVID-19 news and education resource webpage for more news and ongoing updates.

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