GAO: ED Needs to Ensure Loan Servicer Accuracy and Call Quality After RIF
By Maria Carrasco, NASFAA Staff Reporter
A government watchdog is calling on the Department of Education (ED) to assess its loan servicers’ accuracy and call quality, and address gaps in its loan servicer oversight, warning that a lack of oversight could be harmful to both borrowers and the department.
The Government Accountability Office (GAO) on Wednesday published a new report examining the extent to which ED’s reduction in force (RIF), which was first announced last year, has affected how Federal Student Aid (FSA) carries out its responsibilities to oversee loan servicers.
GAO notes that in February 2025, FSA stopped assessing student loan servicers on accuracy and call quality due to lack of staff capacity. Around this time last year, Education Secretary Linda McMahon first announced ED’s plans for a RIF, and President Donald Trump signed an executive order directing McMahon to dissolve ED and return education “back to the states.”
Before discontinuing these assessments, FSA assessed its loan servicers quarterly on accuracy and call quality. For accuracy assessments, FSA would review data for borrowers in servicer systems and compare it to data in FSA systems to determine if servicers were keeping accurate records for borrowers. For call quality assessments, FSA would review phone calls between borrowers and servicers to determine if servicers were providing good and accurate customer service.
GAO found that the decision to stop these quarterly assessments occurred after the Trump administration began its effort to dissolve ED and downsize the department in January 2025. ED reported that between January and December 2025, FSA staffing dropped from 1,433 employees to 777, which is a reduction of 656 employees.
A recent NASFAA analysis examined how staffing levels, workforce composition, and departure patterns shifted across ED in 2025.
Notably, GAO found that prior to FSA discontinuing this oversight, most servicers did not meet the performance standards for accuracy and faced financial penalties of about $850,000.
Stopping these assessments on accuracy and call quality pose serious risks, such as overpaying servicers for poor service, GAO warned. Borrowers could face many financial consequences with this lack in servicer oversight, such as overbilling or being placed in the wrong loan repayment status. GAO also warned that FSA lacks assurance that borrower records are correct and that servicers are giving borrowers quality information.
“Inaccurate records can result in borrowers being billed for incorrect amounts or placed in the wrong repayment status,” the report reads. “Additionally, borrowers need to be given accurate information when they call for help. Addressing these gaps in servicer oversight will assist Education in carrying out its statutory responsibilities and also help the government avoid overpaying servicers for poor performance.”
Richard Lucas, acting Chief Operating Office (COO) of FSA, disagreed with GAO’s assessment and outlined several methods FSA is taking to ensure student loan servicers distribute accurate information to borrowers in a letter included in the GAO report. Measures FSA is taking to ensure quality and accurate calls include data quality assessments, cross-system data validation, surveys, audits, complaint reviews, operational reviews and reporting, and FSA leadership oversight.
“FSA utilizes a variety of robust methods to assess servicer accuracy and call quality to fulfill its servicer oversight responsibilities,” Lucas wrote in a letter. “FSA's multi-program approach to vendor oversight, as detailed in this response, is a far superior strategy to the limited impact that the accuracy and call quality SLAs have had on servicer performance.”
However, GAO does not believe these methods outlined in Lucas’s letter are effective substitutes and maintains the importance of assessing servicer call quality and accuracy.
This GAO report is part of a request from Sen. Bernie Sanders (I-Vt.), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and Rep. Bobby Scott (D-Va.), ranking member of the House Education & Workforce Committee, to examine ED’s capacity to carry out its statutory responsibilities after its RIF. ED’s oversight of loan servicers is just one of its many statutory responsibilities.
Scott responded to Wednesday’s report, stating that ED’s lack of oversight on student loan servicers “is a dereliction of duty.”
“I am gravely concerned that ED incorrectly believes it can replace real oversight of servicers with untested automation or artificial intelligence,” Scott said in a statement. “These findings should serve as a flashing red warning sign for Congress about what is to come as ED ramps up to implement the Republicans’ overhaul of the student loan program in the ‘Big Ugly Bill’ and the havoc it will cause for borrowers.”
Sanders also responded to the GAO report, criticizing the Trump administration for proposing large funding cuts to higher education.
“Instead of providing relief to 43 million Americans who are drowning in student debt, the Trump Administration has made it harder for them to understand how much they owe and how long it will take to pay back by illegally firing nearly half the staff at the Federal Student Aid Office,” Sanders said in a statement.
Publication Date: 3/16/2026
David S | 3/16/2026 9:26:41 AM
This was about as difficult to predict as saying the sun is going to rise in the east.
College already costs too much in America, causing millions to go into debt unimaginable in other countries. Then the debt isn't properly serviced; this is indisputable, there are countless well documented examples. And now the government agency that's legally obligated to assist borrowers when loans aren't being properly serviced, having been stripped of most of its staff, resources and institutional memory by a team of unknowledgeable hacks given an assignment to do away with services American taxpayers rely on and pay for, denies there's any issue
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