Federal Student Loans: Additional Actions Needed to Implement Loan Officer Oversight Recommendations

What the GAO found

The Department of Education (Education) relies on contracted loan managers to help manage its outstanding federal student loans, but GAO has previously identified weaknesses in Education’s oversight of these managers. . Education has implemented two of six recommendations made by GAO in a 2015 testimony and a 2016 report targeting gaps in repairer education guidance, repairer call center monitoring, follow-up complaints and performance measures. Education said the remaining four recommendations will be addressed over time through the broader overhaul of its student loan system, although an Education official said details of that system have not yet been announced. yet been determined. GAO will continue to monitor Education’s progress in implementing these open-ended recommendations, which would help Education provide better service to borrowers and improve program integrity.

Status of GAO Recommendations on Education Oversight of Student Loan Services

Recommendations closed/implemented Report

Improve the methodology for monitoring calls between services and borrowers


Best Call Monitoring Results Document


Open recommendations Report

Ensure clear, sufficient and consistent guidance to loan servicers


Establish minimum call center hours for repairers


Improve monitoring of borrower complaints


Evaluate and adjust performance metrics used for services


Source: GAO analysis of Department of Education information. | GAO-18-587R

Note: GAO Recommendations, Federal Student Loans: Key Weaknesses Limit Entrepreneur Management Through Education, GAO-16-196T (Washington, DC: November 18, 2015); and Federal student loans: Education could improve customer service and monitoring of direct loan programGAO-16-523 (Washington, DC: May 16, 2016).

Why GAO Did This Study

Nearly 43 million borrowers held nearly $1.4 trillion in federal student loans as of December 2017, which were primarily provided through Education’s William D. Ford Federal Direct Loan (Direct Loan) program. Education currently contracts with nine loan managers to help manage its direct loan portfolio. These managers process payments, provide borrowers with information about repayment plans, and perform other responsibilities. The GAO has published a report and testimony over the past 3 years examining the education oversight of these repairers and made six recommendations. GAO was asked to provide an update on education oversight of student loan servicers.

This report examines the status of education efforts to implement previous GAO recommendations to improve oversight of federal student loan servicers. GAO reviewed education documentation on steps it has taken to implement previous recommendations, reviewed its recent solicitation of proposals for a new student loan management system, and interviewed agency officials .

For more information, contact Melissa Emrey-Arras at (617) 788-0534 or emreyarrasm@gao.gov.

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