GAO: Education Needs to Strengthen Student Loan and College Accountability
Summary
The GAO has reported that the Department of Education needs to strengthen its oversight of student loan servicers and colleges. Staff reductions have led to the discontinuation of key assessments for servicer accuracy and call quality, potentially costing the government over $850,000 in penalties for poor performance.
What changed
The Government Accountability Office (GAO) has issued a report highlighting significant weaknesses in the Department of Education's accountability measures for student loans and colleges. Specifically, the report notes that due to substantial staff reductions in the Office of Federal Student Aid (FSA) in 2025, the Department ceased assessing student loan servicers on accuracy and call quality. This discontinuation occurred despite most servicers failing to meet performance standards and incurring approximately $850,000 in penalties prior to the cessation of these assessments. The GAO maintains that alternative oversight methods used by the Department are not effective substitutes for these critical assessments, which are vital for protecting borrowers and ensuring the government does not overpay for inadequate servicer performance.
Furthermore, the GAO reiterates previous recommendations from 2019 and 2017 aimed at improving borrower income verification for income-driven repayment plans and enhancing the monitoring of colleges' financial stability. Implementing these recommendations could prevent billions in potential fraud and error and protect taxpayers from financial risks associated with college closures. The report indicates that while the Department has taken some steps, more comprehensive action is required to fully implement these recommendations and bolster overall accountability within the federal student aid system. Compliance officers should review the specific recommendations from the cited GAO reports (GAO-26-108534, GAO-19-347, GAO-17-555) and assess their organization's alignment with these findings, particularly concerning servicer oversight and financial condition monitoring.
What to do next
- Review GAO report GAO-26-108534 regarding servicer oversight
- Review GAO report GAO-19-347 regarding borrower income verification
- Review GAO report GAO-17-555 regarding college financial condition monitoring
Penalties
Approximately $850,000 in penalties for servicer inaccuracy prior to discontinuation of assessments.
Source document (simplified)
GAO-26-109069 Published: Mar 26, 2026. Publicly Released: Mar 26, 2026.
Fast Facts
We testified on how the Department of Education can strengthen accountability over student loans and colleges before the House Committee on Education and Workforce.
It is based primarily on the following reports:
- Federal Student Loans: Education Needs to Address Gaps in Servicer Oversight
- Federal Student Loans: Education Needs to Verify Borrowers' Information for Income-Driven Repayment Plans
- Higher Education: Education Should Address Oversight and Communication Gaps in Its Monitoring of the Financial Condition of Schools Education has taken some steps to implement previous recommendations but more action is needed.
Highlights
What GAO Found
In March 2026, GAO reported on the impact of recent staffing reductions on the Department of Education’s oversight of its student loan servicers. In February 2025, Education stopped assessing student loan servicers on accuracy and call quality due to lack of staff capacity, according to Education officials. Prior to discontinuing these quarterly assessments, Education assessed servicers on these metrics for two quarters. These assessments were intended to measure whether servicers were (1) keeping complete and accurate records for borrowers and (2) providing borrowers good customer service.
The decision to stop these assessments occurred shortly after the administration began issuing presidential directives and guidance on downsizing the federal workforce in January 2025. Education reported that between January and December 2025, the number of staff at its Office of Federal Student Aid (FSA) decreased from 1,433 to 777.
Prior to FSA discontinuing this oversight, most servicers did not meet the performance standards for accuracy and faced corresponding financial penalties of about $850,000. FSA continued to assess servicer performance on the other performance metrics, which it characterized as less labor intensive to monitor.
Student Loan Servicer Performance on Accuracy Metric
In March 2026, GAO recommended that Education assess servicer accuracy and call quality. Education disagreed, stating that it uses other methods to assess servicer performance. GAO maintains these other methods are not effective substitutes. Moreover, GAO maintains these two assessments are important to protect borrowers and help the government avoid overpaying servicers for poor performance.
GAO also made other recommendations in prior work to help Education strengthen accountability. For example, implementing GAO’s 2019 recommendations to improve verification of borrower income and family size information could help reduce the risk of fraud and error in certain repayment plans and potentially save over $2 billion. Similarly, implementing GAO’s 2017 recommendation to update the formula for measuring colleges’ financial condition could help protect taxpayers against the financial risk of college closures. Finally, implementing GAO’s 2016 recommendation to improve tracking of borrower complaints could help Education better track trends and ensure the program effectively meets borrower needs. Education has taken some steps to address these recommendations; however, the agency needs to do more to implement them and strengthen accountability in higher education.
Why GAO Did This Study
In fiscal year 2025, about 10.5 million students received over $131 billion in federal student aid to help them pursue higher education. Education is responsible for maintaining accountability and protecting the federal investment in higher education. Education’s responsibilities include overseeing colleges, federal student aid, and the servicers that help administer the student loan program. Education’s responsibilities have grown substantially in recent years based on changes to the size and complexity of the federal student loan program, which now exceeds $1.6 trillion in outstanding loans.
This testimony summarizes the findings and recommendations from key GAO reports issued from 2016 through 2026. It includes recent work examining the impact of staffing reductions on Education’s oversight of student loan servicers (GAO-26-108534) and other prior work examining higher education accountability issues (GAO-19-347, GAO-17-555, and GAO-16-523). GAO also updated the status of related recommendations.
Recommendations
GAO made 10 recommendations in the reports included in this statement. Education has not yet fully addressed seven of these recommendations. GAO will continue to monitor Education’s progress in implementing them.
Full Report
GAO Contacts
Melissa Emrey-Arras Director Education, Workforce, and Income Security emreyarrasm@gao.gov
Media Inquiries
Sarah Kaczmarek Managing Director Office of Public Affairs media@gao.gov
Public Inquiries
Topics
Education Higher education Student loan repayment Student financial aid Student loans Human capital management Federal workforce Student financial assistance Financial conditions Taxpayers Students
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