A college bell from Milford, Pennsylvania, stands in entrance of the Division of Training’s headquarters in Washington, March 6, 2025.
Chip Somodevilla | Getty Photographs Information | Getty Photographs
The U.S. Department of Education has scaled back its oversight of the businesses that handle federal scholar loans, a brand new congressional watchdog report discovered.
In February 2025, the division stopped “assessing servicers on accuracy and name high quality,” in response to the report from the nonpartisan Authorities Accountability Workplace. That change occurred shortly earlier than the Trump administration terminated round 50% of the Training Division’s workers.
With out its analysis of scholar mortgage servicers, the GAO wrote, the Training Division “cannot make sure that borrower information are appropriate and servicers are giving debtors high quality info.” The workplace additionally mentioned that debtors could possibly be positioned into the flawed reimbursement standing or overbilled consequently.
“As an alternative of offering reduction to 43 million Individuals who’re drowning in scholar debt, the Trump Administration has made it more durable for them to know how a lot they owe and the way lengthy it’s going to take to pay again,” mentioned Sen. Bernie Sanders, I-Vt., in an announcement. Sanders was among the many lawmakers who requested the GAO investigation.
The Training Division didn’t instantly reply to a request for remark.
Pupil mortgage servicers have a spotty historical past
The Training Division contracts with completely different firms to service its federal scholar mortgage portfolio. It pays these firms greater than $1 billion a 12 months to handle debtors’ accounts, in response to larger training knowledgeable Mark Kantrowitz.
The servicers course of debtors’ mortgage funds, provide info to debtors and assist them entry reimbursement plans and forgiveness alternatives.
The Federal Pupil Help Workplace on the Training Division managed the assessments of those scholar mortgage servicers. Nonetheless, the Trump administration has diminished the workers on the FSA to 777 individuals from 1,433, the GAO mentioned.
Pupil mortgage servicers have lengthy confronted criticism from advocates and lawmakers for deceptive debtors or failing to offer them with ample assist.
“With out oversight to make sure that mortgage servicers present debtors with appropriate info, debtors could make choices that negatively impression their funds, corresponding to selecting the flawed reimbursement plan, not qualifying for forgiveness and defaulting on their scholar loans,” Kantrowitz mentioned.
The Biden administration withheld $7.2 million in fee from servicer Mohela in 2023 for not sending timely billing statements to 2.5 million debtors, leading to greater than 800,000 debtors changing into delinquent.
In 2017, days earlier than Trump took workplace, the Client Monetary Safety Bureau sued Navient. It accused the then-servicer of steering scholar mortgage debtors away from inexpensive reimbursement plans and into costly forbearances, which brought about many to incur steep interest charges.
Navient stopped servicing federal loans in 2021 and, in 2024, reached a $120 million settlement with the CFPB. As a part of that deal, the CFPB banned the corporate from ever once more managing federal scholar loans.
Mohela and Navient didn’t instantly reply to a request for remark.
