Federal oversight protects student borrowers. Some of it has stopped, watchdog says

Just over a year ago, the U.S. Department of Education abandoned key oversight of the companies that run the federal student loan program, according to a new report from the nonpartisan U.S. Government Accountability Office (GAO).

GAO investigators found that, in February 2025, the Office of Federal Student Aid (FSA) stopped reviewing the accuracy of loan servicers’ records. FSA also stopped reviewing recordings of calls with borrowers to make sure they’re being given accurate information.

Without this oversight, the report warns, borrowers could feel the consequences.

“If servicers’ records are inaccurate, borrowers could, for instance, be placed in the wrong loan repayment status, billed for incorrect amounts, or not have a refund processed in time,” the report says. “Similarly, FSA has not monitored calls since February 2025, so there is a risk that borrowers have received or will receive incorrect information and poor customer service.”

The investigation was requested by the ranking members of the House and Senate education committees, Rep. Bobby Scott, D-Va., and Sen. Bernie Sanders, I-Vt.

“Instead of providing relief to 43 million Americans who are drowning in student debt,” Sanders said in a statement to NPR, “the Trump administration has made it harder for them to understand how much they owe and how long it will take to pay back.”

What the administration has to say about GAO’s findings

FSA is supposed to conduct quarterly reviews, according to its contracts with loan servicers.

These reviews include comparing loan servicers’ borrower records with FSA’s own records, to screen for gaps or discrepancies, as well as “targeted reviews” of borrowers in specific situations, including those who request temporary relief from their payments.

The assessments that were stopped are more labor-intensive than other types of oversight that have been automated, GAO says. According to the report, agency officials told the government watchdog they stopped these reviews in early 2025 “due to lack of FSA staff capacity.” That’s around the same time the Trump administration began dramatically reducing staffing levels at the Education Department.

According to the report, FSA began 2025 with 1,433 staffers; by December, it had 777 – a 46% reduction.

In a written response accompanying the report, Richard Lucas, FSA’s acting chief operating officer, disagreed with GAO’s recommendation that FSA resume the reviews. While he confirmed that FSA had, indeed, stopped the oversight in question, Lucas wrote, “FSA determined that a better approach is to provide substantial oversight through additional activities that measure the accuracy of servicer data and the quality of their performance.” Those activities include regular reviews of borrower satisfaction surveys.

Melissa Emrey-Arras, who led the GAO study, says FSA’s “better approach” isn’t better.

“While reviewing those satisfaction surveys may be helpful, they don’t directly assess the quality of the information given to borrowers. A borrower may indicate they were satisfied with a call, not realizing they were given completely wrong information by their servicer,” she says.

The last FSA review found problems with loan servicer accuracy

Scott Buchanan, the executive director of the Student Loan Servicing Alliance, which represents the servicers working on the federal student loan program, says servicers also police themselves.

“[Servicers] internally are monitoring far more than any of our regulators ever could or would. Because it is in our best interest to make sure those errors are fixed. And because we have contracts, and if we have major issues that have become clearly apparent, then people will say, ‘We’ll find someone else to do it.'”

At the end of 2024, before the Trump administration cut oversight, GAO’s review of servicer recordkeeping found that “four of the five servicers did not meet the accuracy performance standard and faced associated financial penalties.”

In fact, recordkeeping at two servicers was troubled enough to merit the maximum financial penalty allowed.

And GAO notes that the Education Department’s independent financial auditor reported as recently as January 2026 that the department “continued to have a material weakness related to the reliability of its student loan data.”

What’s more, Emrey-Arras says, scaling back oversight at FSA has also meant scaling back efforts to hold servicers financially accountable for their performance. This accountability, she says, “is critical. Without it, the government risks overpaying for poor performance.”

For borrowers, servicer mistakes can lead to very real problems, said Scott in a statement to NPR. “Borrowers can either overpay or be placed in the wrong student loan repayment program. [The Education Department’s] refusal to conduct oversight of student loan servicers is a dereliction of duty.”

Scaled-back oversight of big student loan changes

These cutbacks in staff and oversight come as millions of federal student loan borrowers will need help transitioning into new repayment plans. The Biden-era SAVE plan is in turmoil, with borrowers now being charged interest and the plan due to be closed by 2028 at the latest. Another 12 million borrowers are either in default on their loans or on their way there.

What’s more, in July, a raft of new, potentially challenging changes to the student loan program will begin – courtesy of Republicans’ One Big Beautiful Bill Act – including the introduction of two brand new repayment plans and the phasing out of others.

GAO warns that these changes will affect millions of borrowers who “will need accurate and complete information when they call for help,” yet, for the time being, the Education Department can’t be certain that’s what borrowers are actually getting.