Why It Matters

A Government Accountability Office (GAO) report published July 13 and publicly released August 6 found that the Department of Education (ED) has failed to give student loan servicers clear, timely instructions when rolling out major program changes. The four companies under contract to manage the federal student loan portfolio all told GAO they had to ask repeated clarifying questions just to understand what the ED was asking them to do.

GAO documented one change request that generated six rounds of questions and answers between Education and servicers over two months before servicers could proceed. One servicer reported receiving just one business day to update how borrowers track their payment counts toward loan forgiveness, leaving no time to prepare for the resulting borrower inquiries.

Education's own guidance acknowledges it can share information with servicers while developing new requirements. The problem: that guidance sets no criteria for when staff must actually do it. All four servicers told GAO that early coordination, such as a meeting to walk through new requirements before a change request is formally issued, would allow them to implement changes faster. Three of the four said it directly speeds up their response time.

GAO made one recommendation: that the Secretary of Education direct Federal Student Aid (FSA) to develop and implement formal criteria for when to conduct early coordination with servicers. Education disagreed, arguing that formal criteria would hinder its ability to respond to shifting administration priorities. GAO is keeping the recommendation open and will monitor the agency.

The Big Picture

The report was requested by then-Ranking Member Bill Cassidy of the Senate Health, Education, Labor, and Pensions (HELP) Committee and then-Chairwoman Virginia Foxx of the House Education and the Workforce Committee. By the time of the report's public release, Cassidy had become Chairman of the Senate HELP Committee and Tim Walberg had become Chairman of the House Education and the Workforce Committee.

GAO reviewed 68 change requests Education issued to servicers between March 2020, when the COVID-19 payment pause began, and December 2024. It interviewed officials from all four servicers under contract when the payment pause ended in August 2023.

As of September 2025, Education held over $1.6 trillion in outstanding federal student loans, per the GAO report. The figure of approximately 43 million borrowers comes from secondary reporting and is not stated on the GAO product page.

Education officials told GAO in June 2025 that early coordination with servicers was not common, citing insufficient time. By December 2025, officials said coordination had recently improved, pointing to an instance where they solicited servicer input on draft repayment plan requirements and revised the change requests before sending them out. GAO acknowledged the improvement but noted that without formal criteria, there is no mechanism to ensure the practice continues.

The Bottom Line

The GAO's finding is straightforward: Education has the authority to coordinate with servicers early, occasionally does so, and acknowledges it helps, but has no rule requiring it. That gap has produced repeated implementation delays in a program that manages over $1.6 trillion in loans. Education's refusal to accept GAO's single recommendation, because criteria would reduce flexibility, leaves the structural problem unresolved. Until FSA establishes formal coordination criteria, servicers will remain dependent on individual staff judgment, and borrowers will remain exposed to the downstream errors that result.

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