UHEAA terminates federal student loan servicing contract ;146 employees to be laid off
KUTV — The Utah Higher Education Assistance Authority terminated its federal student loan servicing contract with the U.S. Department of Education’s Office of Federal Student Aid, effective immediately. As a result, UHEAA expects a reduction in force of 146 employees beginning in January 2021.
David S. Schwanke, Interim Executive Director of UHEAA, said in a prepared statement:
We regret that the decision to end the contract with the U.S. Department of Education’s Office of Federal Student Aid negatively impacts so many of our highly valued employees, and we’re committed to helping them through this transition over the coming months. After careful consideration, the decision to terminate the federal student loan servicing contract was made in the best interest of the State of Utah and our organization and its long-term financial sustainability.
UHEAA serviced federal student loans as CornerStone Education Loan Services under the federal contract over the last nine years. Though UHEAA was able to serve 1 million student loan customers across the nation, the terms of the contract led to financial losses for the organization, and UHEAA leaders reached the decision to terminate the contract, a news release stated.
Both UHEAA and FSA will immediately begin the process of transferring accounts to another federal student loan servicer with as minimal disruption as possible over the next several months.
Those affected by the layoffs include UHEAA call center representatives and loan processors. The initial round of layoffs will begin in January 2021 as the process of transferring student loan accounts winds down.
