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GAO Report: Clearer Servicer Instructions Could Cut Loan Errors
GAO report finds Education Department's vague instructions to Nelnet, Aidvantage, MOHELA and EdFinancial lead to billing errors and long hold times for borrowers. The department rejected a key fix.
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A new government report says the Education Department's failure to give clear, early instructions to student-loan servicers is driving billing errors and long customer-service delays for millions of borrowers.
The Government Accountability Office released a report Thursday examining coordination between the department and its four main servicers – Nelnet, Aidvantage, MOHELA and EdFinancial. The servicers told the GAO they face challenges implementing program changes because of a "lack of clear up-front instruction" from the department, which has led to "extensive back-and-forth," the report said.
The result: delayed borrower communications, incorrect billing statements and administrative errors that take time to fix.
"The instruction Education provides to servicers on changes to the student loan program is critical to ensuring smooth operations and good customer service for these borrowers," the report said.
The GAO recommended the Federal Student Aid office develop formal criteria for when it should start early conversations with servicers about upcoming changes, especially complex ones or those with tight deadlines.
One servicer said the department gave it just one business day to update how borrowers track their total payments toward loan forgiveness. The servicer said that left no time to prepare for the surge of calls about the change.