A new federal watchdog report is raising concerns about how closely the Department of Education is monitoring companies responsible for managing the nation’s $1.6 trillion federal student loan portfolio. The report warns that oversight gaps could expose borrowers to inaccurate billing, incorrect repayment statuses, and poor customer service at a time when the student loan system is undergoing major changes.
According to a report from the Government Accountability Office, the Department of Education stopped assessing key performance metrics for federal student loan servicers in February 2025 after staffing reductions reduced the agency’s capacity to conduct the reviews.
Before the oversight program was paused, the Department of Education’s Office of Federal Student Aid evaluated servicers using several performance metrics. Two of the most critical were:
- Accuracy: Whether servicers maintained correct borrower records across systems
- Call quality: Whether representatives provided accurate information and professional service during borrower calls
These reviews involved comparing borrower data across systems and reviewing recorded calls between borrowers and servicer representatives.
However, staffing cuts significantly reduced oversight capacity. The GAO report notes that FSA staffing fell from 1,433 employees to 777 during 2025. Once the reviews stopped, the agency no longer had a systematic way to verify whether borrowers were receiving accurate information about their loans.
Prior to the oversight pause, the GAO found that four of the five major student loan servicers failed to meet accuracy performance standards during earlier reviews and were assessed financial penalties totaling about $850,000. Without continued monitoring, the report warns that systemic servicing issues could go undetected.
The Department of Education disagreed with the GAO’s recommendation to resume monitoring these specific metrics. Officials said the agency now relies on other oversight tools such as:
- Servicer satisfaction surveys
- Data validation reviews
- Complaint monitoring
- Operational meetings with servicers
Still, the GAO concluded these methods do not provide the same level of accountability as direct monitoring of accuracy and call quality.
