Student loan servicers face less oversight under Trump: GAO
A school bell from Milford, Pennsylvania, stands outside the Department of Education headquarters in Washington on March 6, 2025.
Chip Somodevilla | Getty Images News | Getty Images
The U.S. Department of Education has reduced its oversight of companies that manage federal student loans as a new congressional watchdog report to create.
In February 2025, the department stopped “evaluating service providers for accuracy and call quality,” according to a report by the nonpartisan Government Accountability Office. This change occurred shortly before the Trump administration terminated Approximately 50% of Ministry of Education staff.
Without evaluations of student loan servicers, the Education Department “cannot ensure that borrower records are accurate and that servicers are providing quality information to borrowers,” GAO wrote. The office also said borrowers may be placed in the wrong repayment status or overbilled as a result.
“Instead of providing relief to the 43 million Americans drowning in student debt, the Trump Administration has made it difficult for them to understand how much they owe and how long it will take to pay them back,” Sen. Bernie Sanders, I-Vt., said in a statement. Sanders was among the lawmakers who called for the GAO investigation.
Ellen Keast, the Department of Education’s press secretary for higher education, told CNBC that the agency uses “a variety of methods” to evaluate loan servicers.
“The agency uses data quality assessments, cross-system evaluation data validation, daily and weekly performance reports from service providers, weekly executive-level check-in meetings, and borrower satisfaction surveys to monitor and improve customer service provided by our vendors,” Keast said.
Student loan services have a spotty history
The Department of Education contracts with different companies to service the federal student loan portfolio. These companies are paid more than $1 billion a year to manage borrowers’ accounts, according to higher education expert Mark Kantrowitz.
Servicers process borrowers’ loan payments, provide borrowers with information, and help them access repayment plans and forgiveness opportunities.
The Office of Federal Student Aid at the Department of Education administered the evaluations of these student loan services. But the Trump administration reduced staff at the FSA from 1,433 to 777 people, the GAO said.
Student loan servicers have long faced criticism defenders And MPs Misleading debtors or failing to provide them with adequate support.
“Without oversight to ensure loan servicers are providing accurate information to borrowers, borrowers may make decisions that negatively impact their financial situation, such as choosing the wrong repayment plan, not receiving forgiveness, and defaulting on their student loans,” Kantrowitz said. he said.
The Biden administration withheld $7.2 million in 2023 payments from servicer Mohela for failing to send billing statements to 2.5 million borrowers on time, leaving more than 800,000 borrowers delinquent.
In 2017, days before Trump took office, the Consumer Financial Protection Bureau sued Navient. He accused his then-servicer of steering student loan borrowers away from affordable repayment plans and into expensive forbearances, leaving many exposed to high interest charges.
Navient ceased servicing federal loans in 2021 and reached a $120 million settlement with the CFPB in 2024. As part of that settlement, the CFPB banned the company from ever administering federal student loans again.
Mohela and Navient did not immediately respond to a request for comment.
