EDITOR'S NOTE -- Updated Nov. 21, 2003, to reflect the correct amount of the award.

Taxpayers stand to save more than $1 billion, and more than nine million student loan borrowers will benefit from more modern, streamlined services under a new contract awarded to ACS Education Solutions, LLC (ACS), Federal Student Aid Chief Operating Officer Terri Shaw announced today.

As a result of a competitive bid process, ACS stands to receive more than $1.038 billion over the next five years, with the Department of Education retaining the option to exercise five one-year extensions, which increase the contract's total approximate value, including all option years, to $2.13 billion.

The contract will significantly enhance the department's Federal Student Aid operations through a new initiative called Common Services for Borrowers, which will consolidate the department's direct loan servicing functions, loan consolidation processes and collection activities for $96 billion in student loan obligations. Currently, five separate systems perform the functions that one system will perform under the new contract.

"Our top priority at Federal Student Aid is our customers -- the students and their families who are working hard to achieve their dreams through a higher education," Federal Student Aid Chief Operating Officer Terri Shaw said. "This contract helps us do just that -- improve service, reduce costs, increase accountability and strengthen program integrity. I want to thank the FSA team for their dedication, commitment and hard work throughout this process."

The Common Services for Borrowers contract has a base period of five years with five additional, one-year extensions. To meet the department's requirements and objectives, ACS partnered with several of the department's current student aid contractors, including EDS, Raytheon Corporation and Pearson Government Solutions and more than 30 small businesses and minority owned enterprises.

Federal Student Aid manages and administers the postsecondary student assistance programs authorized by the Higher Education Act of 1965. This year, FSA will deliver approximately $60 billion in financial aid to over nine million students and families. In 1998, FSA became the federal government's first performance-based organization, requiring FSA to improve the delivery of federal financial aid services by developing a market-focused and results-oriented management approach.

President Bush's 2004 budget request expands overall student aid available for postsecondary education to a record $62 billion, an increase of $2.8 billion, or 5 percent over the fiscal year 2003 appropriated level.

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