"The Education Department’s Federal Student Aid office has failed to keep watch over the contractors servicing its $1.4 trillion portfolio of student loans, a lapse that may be costing taxpayers, the federal agency’s inspector general said in a scathing audit issued Thursday," The Washington Post reports.
"Companies such as Navient, Great Lakes and FedLoan Servicing are paid millions of dollars by the federal government to collect student loan payments, guide people through the thicket of repayment options and help borrowers avert default. Critics of these loan servicers say they are not doing enough to stem rising delinquencies and defaults, accusing them of providing inconsistent information and mishandling borrower accounts.
Many critics have accused the Education Department of lax supervision of its contractors, an allegation now backed up by the inspector general’s audit.
The report documents a laissez faire culture within the federal aid office that has allowed student loan servicers to operate without being held accountable for not complying with their contracts. The office does not consistently track the performance of servicers or penalize them when mistakes are identified, the inspector general found. Even when contractors are admonished, the federal aid office often neglects to catalogue the incident, giving an incomplete picture of problems within the servicing system, according to the audit.
'Issues identified in the OIG report span two administrations and point to organizational and structural changes that must be made to help FSA meet its congressionally mandated objectives,' said Justin Draeger, president of the National Association of Student Financial Aid Administrators, a trade group. 'Improper oversight creates an environment that normalizes subpar customer service of an already confusing and frustrating process for too many borrowers.'"
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Publication Date: 2/15/2019