The GAO argues that loan servicers need to be kept on the hook for the quality of their customer service calls and the accuracy of their data.
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The Education Department has effectively ended its oversight of whether student loan servicers maintain accurate records and provide quality customer service, the Government Accountability Office says in a new report. But the Trump administration and loan servicer associations counter that, contending that while two ways to gauge the quality of customer service calls and accuracy of data have been discontinued, plenty of other accountability measures still remain in place.
The report, released Wednesday, suggests that the decline in quality assurance is tied to a dramatic downsizing in staff at FSA and throughout the Department of Education.
A year ago, Education Secretary Linda McMahon announced that she had sliced her department’s head count in half. The total number of employees dropped from more than 4,100 to about 2,000 as the secretary offered buyout deals and early-retirement plans to hundreds of staff members and then fired more than 1,000.
At FSA, the number of staff plummeted from 1,433 to 777, or by 45.8 percent, between January and December 2025, according to the GAO.
Historically, under a system put place by the Biden administration in 2024, the department’s evaluation process focused on six standards: data accuracy, customer service call quality, call abandonment rate, customer satisfaction, timeliness of completion of certain tasks and financial monitoring. Any servicer that failed to meet one or more of these standards could face a deduction of up to 5 percent of their contractual pay rate per failed category, or 20 percent total.
But starting in February 2025—shortly before the reduction in force—FSA stopped auditing databases and listening in on customer service calls as a way to measure accuracy and quality. Accuracy was an area in which four of the five servicers failed over the course of the two quarters the policy was in effect. In total they were assessed fines of $850,000, but FSA waived the financial penalty in the contracts, according to the report.
The consequences, GAO said, are gaps in oversight that could negatively affect borrowers.
The FSA is still using other tools it deemed “less labor intensive” to evaluate loan servicers on the data accuracy and customer service call quality standards, but parts of the quarterly performance reviews are no longer being conducted.
Now, with fewer staff and less stringent oversight measures, little can be done by ED to “identify and remedy systemic servicing issues,” according to the report.
“By not assessing servicer accuracy and call quality, FSA lacks assurance that borrower records are correct and that servicers are giving borrowers quality information,” the report reads. “Inaccurate records can result in borrowers being billed for incorrect amounts or placed in the wrong repayment status.”
The GAO concluded by recommending that the FSA resume quality and accuracy evaluations. But Trump officials declined to do so, saying that there are other, more efficient and valuable accountability metrics still in place, like borrower satisfaction surveys, to “provide critical oversight responsibilities.”
The discontinued evaluations of call quality and data accuracy “do not meaningfully measure servicer performance and will not improve the financial health of the federal student loan portfolio,” the department’s response letter reads.
Scott Buchanan, executive director of the Student Loan Servicing Alliance, also noted that just because the pay deductions regarding call quality and data accuracy are waived doesn’t mean all penalties are gone. Fines for the other four categories still remain, and there’s another, separate penalty system that can reduce the loan volume allocated to a servicer in the future if they fail to meet quality standards.
So while that system focuses on different metrics like borrower satisfaction and default prevention, it can be “an incredible economic penalty for a servicer,” he said. “[It’s] an incentive for a servicer to not only do well on the metrics that the department monitors today, but also work hard on all fronts.”
Buchanan later added that many states have their own loan servicer regulators that conduct call- and data-monitoring programs, so it will be hard for poor performers to slip through the cracks.
Left-leaning lawmakers, on the other hand, say weakening Biden-era tools that force the department to look for and identify flaws rather than waiting for borrowers to report them could allow servicers to make “egregious errors.”
“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,” Sen. Bernie Sanders, a Vermont Independent and ranking member of the Health, Education, Labor and Pensions Committee, said in a news release about the report. “That is unacceptable. But sadly, it is not surprising.”
Rep. Bobby Scott, a Virginia Democrat and ranking member of the House Education and Workforce Committee, stressed that FSA is legally required to ensure students receive accurate information about their loans and warned that if they don’t, it could lead to dire consequences.
“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,” Scott said in the same release. “If you are a borrower in need of assistance with your student loans, there is no one at ED to help you.”
