Government Watchdog Report Sheds Light on How Mass Layoffs Put Borrowers At Greater Risk of Servicer Errors

March 13, 2026 — Press Release

GAO Report Shows ED Layoffs Resulted in Scaled Back Oversight of Student Loan Servicers, Increasing Risks of Servicing Errors, Less Servicer Accountability

WASHINGTON — As millions of borrowers have been forced to navigate unprecedented chaos and uncertainty within the federal student loan system, the U.S. Government Accountability Office (GAO) released a damning report. The report finds that, over the past year, due to severe staffing shortages, the U.S. Department of Education’s (ED) Office of Federal Student Aid (FSA) failed to engage in critical oversight and assess student loan servicers on the accuracy of student loan records and call quality to ensure borrowers were receiving accurate information. The report comes just one day after the Saving on a Valuable Education (SAVE) repayment plan was formally vacated—a decision that will force more than 7 million borrowers off of their repayment plan and leave them in need of assistance from their servicer.

In response, National Consumer Law Center Staff Attorney, Alpha Taylor released the following statement:
​​”The GAO report highlights the devastating impact that the Trump administration’s gutting of the Department of Education has had on the federal student loan system. Federal student loan borrowers are getting inaccurate and incomplete information because the understaffed Department of Education is giving a free pass to loan servicers that are not meeting the performance standards outlined in their multi-billion dollar government contracts.

“Instead of ensuring borrowers receive the most accurate and complete information about their loans and penalizing loan servicers for poor performance, the Department of Education is looking the other way. While the Department chooses to ignore its responsibility to hold loan servicers accountable through effective oversight, student loan borrowers do not have the luxury of avoiding the real-life consequences of a dysfunctional loan-servicing system on autopilot.”

Protect Borrowers Policy Director Aissa Canchola Bañez released the following statement:
“We always knew President Trump’s efforts to dismantle the U.S. Department of Education (ED) and mass fire nearly half of the Department’s dedicated public service workers were never about making government more efficient. Today’s GAO report shows that borrowers are going to be forced to pay the price for these irresponsible, callous mass firings. Meanwhile, student loan servicers—the private companies profiteering off pushing working families further into debt—are allowed to get off scot free for failing to do their jobs. This could not come at a worse time, as millions of SAVE borrowers will be forced out of their repayment plan and have no other choice but to rely on their servicer to maintain access to an affordable repayment option. Congress must hold this Administration accountable and demand that ED engage in critical oversight of its contractors.” 

Background

Protect Borrowers, the National Consumer Law Center, and Selendy Gay PLLC are representing AFT in its lawsuit against the loan servicer MOHELA on behalf of itself, its members, and the general public. The lawsuit alleges that, due to MOHELA’s unlawful servicing practices, including its ongoing call deflection scheme, millions of borrowers have missed payments, been overcharged, had their applications for debt cancellation mishandled, and received inaccurate advice. As the lawsuit explains, MOHELA’s servicing failures are not merely nuisances; they are illegal. The GAO’s finding that the government has stopped assessing federal loan servicers on accuracy and call quality sheds light on why servicer misconduct has been going unchecked and the need for accountability.