Republican Leaders Seek Investigation into Direct Loan Management

Republican Leaders on the House Education & the Workforce Committee and Senate Committee on Health, Education, Labor and Pensions (HELP) announced yesterday that they have requested an investigation into the management of the Direct Loan program.  Leaders sent the official request to the Government Accountability Office (GAO), asking the GAO to examine the oversight of the program and citing a growing number of complaints that suggest the Education Department (ED) does not have the capacity to run the program in an effective manner.

Cited complaints from the House Education & Workforce Committee include: 

  • Missing financial information and payments;
  • Loans moved to new servicers without any notice to the borrower;
  • Borrowers suddenly moved into forbearance;
  • Unexpected changes to the loan principal amount;
  • Lengthy consolidation processes and lack of status updates;
  • Problems with the loan rehabilitation program;
  • Poor customer service and record keeping; and
  •  Data breeches and website outages.

“The sheer volume of complaints about the Direct Loan Program is extremely disconcerting, and raises serious questions about the Obama administration’s ability to serve student loan borrowers effectively,” said Chairman of the House Committee on Education & the Workforce John Kline (R-MN). “With the federal government now responsible for all student lending, we have a responsibility to conduct strong oversight of the Direct Loan program to ensure it is working for borrowers and taxpayers.”

The letter specifically asks GAO to examine questions regarding ED’s capacity to run the program, taxpayer protections, program performance,  consumer information & transparency, and servicer incentives & training.

Media Coverage


Publication Date: 11/6/2012

Peggy M | 11/6/2012 2:55:08 PM

Never had any problems with direct loans (4 family members with loans). My problems began when 3 of the 4 were taken away from the dept of ed and moved to private servicers. What a mess. Keep direct loans. The feds do it better.

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