S. 3980 — Federal Loan Systems Modernization Act of 2026

This section defines terms used in the Act, including "Administrator" and "Administration" (General Services Administration); "agency" (as defined in 5 U.S.C. §551); "appropriate congressional committees" (Senate Committee on Homeland Security and Governmental Affairs and House Committee on Oversight and Government Reform); "customer agency"; "Director" (Office of Management and Budget); "Federal loan program" (any direct or guaranteed federal loan or credit program administered by an agency); "loan management"; "loan management technology"; "Platform" (Lending.gov, a centralized shared services lending platform established under section 4(a) that includes an electronic portal for federal direct lending applications); and "Provider" (shared service provider of the Platform).

This section states the purposes of the Act: (1) to address inefficiencies from outdated technology in managing federal lending processes and programs across agencies, and mitigate consumer access difficulties, by incorporating commercially available technology into a dedicated loan application platform; (2) to authorize creation of a centralized loan platform called “Lending.gov,” using industry-standard commercial loan processing software, in accordance with the Federal Acquisition Regulation's preference for commercial products and services (41 U.S.C. 3307); (3) to establish government-wide requirements for loan management as criteria for selecting technology for the platform; and (4) to provide agencies with responsibility and authority for platform oversight.

This section directs the Administrator to submit to the Director and appropriate congressional committees, not later than 6 months after the date of enactment, a plan to establish the Lending.gov platform utilizing commercially available loan management technology. The plan must include (1) designation of a lead agency as the initial provider and operational host; (2) a review of federal loan programs subject to integration, coordinated with the Federal Credit Policy Council; (3) common deficiencies and areas of wasteful spending from outdated systems, including findings from agency inspectors general and the Government Accountability Office; (4) the proposed operational framework; (5) integration of commercial loan management technology at best value to the federal government, in accordance with 41 U.S.C. §3307 (i.e., requiring executive agencies to prefer commercial products and services in procurement, to the maximum extent practicable); (6) a timeline for implementation; and (7) an estimate of implementation costs.

This section establishes operational requirements for the Lending.gov platform (i.e., a centralized digital platform for federal loan programs). Specifically, it directs the Provider to (1) operate, maintain, and improve the platform and related systems; (2) provide onboarding, technical assistance, loan servicing, and portfolio management to participating agencies; (3) ensure compliance with federal cybersecurity, privacy, financial, and credit program standards; (4) integrate commercial loan management tools (e.g., for underwriting, fraud detection); (5) enter interagency agreements for shared services and cost recovery; (6) include auditable financial capabilities and ensure agency data ownership and portability in standardized formats; (7) prioritize program manager satisfaction via annual surveys, public reporting of results, and remediation plans within 60 days if thresholds are unmet (developed in consultation with agencies); (8) grant Provider employees access badges and systems at customer agencies; and (9) provide performance dashboards and reports on metrics such as availability and processing times to the Administrator, Director, and agencies, all in coordination with oversight under §7.

This section requires the Director to commence migration of other federal agency loan management systems to the Platform established under section 4 no later than two years after the Administrator submits the required report under section 4, in consultation with the Administrator, Provider, and relevant agency heads. It further requires each agency administering a federal loan program to complete migration no later than three years after enactment, unless granted an exception. The Director must establish and publish migration criteria, in consultation with the Administrator, covering loan programs that (1) originate or service more than 50 loans annually or (2) have aggregate loan amounts exceeding $10 million. The Director may grant exceptions of no longer than three years if migration is impracticable or contrary to program efficiency, provided the Director notifies congressional committees within 30 days and the Administrator within 15 days; excepted agencies must develop a post-exception migration plan within two years.

This section directs the Administrator to oversee migration to and management of the Platform by (1) reviewing the adequacy of the operational framework in consultation with the Federal Credit Policy Council; (2) establishing government-wide loan management standards, in coordination with the Director and the Federal Credit Policy Council, applicable to the Provider and all federal credit programs; (3) recommending to the Director on exceptions under section 6(c), including analysis of impacts on long-term government-wide cost effectiveness of loan management and Platform sustainability; (4) monitoring agency compliance with migration requirements; and (5) submitting annual reports to the appropriate congressional committees on migration status, exceptions, service levels, recommended investments or policy changes, and long-term cost effectiveness. The section further authorizes the Administrator, after initial Platform establishment, to assess potential benefits of additional providers to create a shared services marketplace—including further adoption, service improvements, and cost efficiencies—and recommend such to the Director, who may designate up to three additional agencies as providers required to utilize the initial Provider's public-facing capabilities for a consistent applicant experience (while allowing separate loan management functions with Administrator approval).

This section establishes financing mechanisms for the Platform's operations. Customer agencies must reimburse the Provider through interagency agreements, service-level agreements, or other arrangements to recover costs for shared services. The Provider may collect a remittance fee of up to 0.25% of the face value of each Federal loan serviced—subject to certification by the administering agency head for direct loans to individuals that the fee will not materially impair borrower affordability, program access, or statutory objectives (with analysis made publicly available)—with all fees deposited into a dedicated fund available until expended solely for Platform operations and maintenance (including approved transfers to customer agencies).