Education awards multimillion-dollar contract for distributing student aid
The Education Department's Federal Student Aid office awarded a contract that could be worth as much as $800 million to an international media company to process student loan applications and distribute financial aid.
The contract to Pearson Government Solutions is worth $80 million for one year and comes with nine one-year renewal options.
Pearson Government Solutions, based in Arlington, Va., will design, build and operate a consolidated online system for processing aid applications for FSA's 25 million students receiving government financial aid. The system will also distribute FSA's $357 billion in financial aid for higher education, including Pell Grants and direct loans.
The new contract, which began Feb. 1, combines four separate contracts and is estimated to save FSA $500 million over 10 years by eliminating legacy system contracts. The system will be implemented over the next three years.
Pearson, which also owns the Financial Times Group and the Penguin Group, two publishing companies, already provides FSA with financial aid application processing systems. This contract is intended to provide services for responding to millions of student inquires regarding financial aid and determining the eligibility of the 18 million applicants that contact FSA each year. The service would include notifying students and the schools of the results.
Pearson Government Solutions has partnered with Electronic Data Systems, IBA, ORC Macro, Bearing Point, Tier 1 and Applied Engineering Management on the online aid processing system.
FSA annually gives out more than $69 billion in postsecondary financial aid to more than 10 million students, including $11 billion in Pell Grants and $51 billion in new student loans. Nearly 80 percent of all federal aid applications are submitted through FSA's Web site, which has been highly rated by the American Customer Satisfaction Survey Index.
In October 2004, the Government Accountability Office criticized FSA, among other things, for failing to reform its student loan granting system. The GAO recommended FSA adopt a seamless system for processing student aid.
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