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By Suzanne Blake
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A major change affecting millions of federal student loan borrowers has been quietly implemented in the U.S. Department of Education following significant staff reductions.
According to a recent Government Accountability Office (GAO) report, the Department of Education has stopped key monitoring activities used to ensure student loan servicers are billing borrowers accurately and providing reliable customer service. The shift occurred after major staffing cuts at the department and its Office of Federal Student Aid (FSA), which oversees the federal student loan system.
Why It Matters
The change removes a critical layer of federal oversight from a student loan system that serves tens of millions of borrowers. As many borrowers navigate repayment transitions and plan changes, loan servicers handle everything from billing and payment tracking to enrolling borrowers in repayment plans.
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Federal watchdogs have warned that without routine monitoring of servicer data and customer service interactions, errors may go undetected. This could raise the risk that borrowers could be incorrectly billed, placed into the wrong repayment status, or given inaccurate guidance about their options.
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What To Know
The GAO found that beginning in February 2025, the Department of Education halted two core oversight practices.
This included reviewing loan servicer data for accuracy, which compared borrower records held by servicers with federal records, as well as monitoring customer service calls between borrowers and loan servicers to assess call quality and accuracy.
The decision was largely driven by lower staff capacity, following large-scale layoffs and workforce reductions at the agency.
However, without these monitoring checks, the GAO warned that the department cannot be certain that borrower records are accurate or that servicers are providing correct information.
“With sweeping cuts to the department's workforce last year, that monitoring has seemingly ended for the time being,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “The concern comes in the many changes that have occurred over the past few months in terms of repayment plans, loan assistance, and other issues that have been subject to legal scrutiny and multiple different decisions.”
The GAO report also noted that four of the five federal loan servicers failed to meet federal accuracy standards during the last two quarters they were evaluated. Despite those failures, the reviews were discontinued, and previously assessed financial penalties were ultimately waived.
According to the GAO, staffing levels at FSA fell sharply over the course of 2025, limiting the agency’s ability to conduct labor‑intensive reviews of servicer performance. For servicer monitoring specifically, the Education Department slashed its staff by 46 percent.
What People Are Saying
The GAO report said: "Servicers may have less incentive to maintain accuracy and call quality. If servicers’ records are inaccurate, borrowers could, for instance, be placed in the wrong loan repayment status, billed for incorrect amounts, or not have a refund processed in time."
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: “This matters because the system is becoming harder to navigate at the exact moment borrowers need clarity. Between court challenges, staffing cuts, and reduced oversight, the DOE isn’t monitoring servicers the way it should. That opens the door for inconsistent or flat-out incorrect information with little accountability.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “These loan servicers are having to keep track of these updates and ensure their policies reflect the alterations. Not having these servicers monitored could present problems if servicers fail to make updates in a timely fashion for borrowers.”
What Happens Next
The change does not alter borrowers’ loan balances or repayment rules directly, but it removes a key layer of federal oversight at a time when tens of millions of Americans remain in repayment or are transitioning between payment plans.
“For borrowers, that means more confusion, delays, and a higher risk of mistakes around repayment or forgiveness,” Thompson said. “Call it deregulation if you want, but with $1.7 trillion in loans, this becomes a systemic issue. Long term, it likely leads to more defaults, less trust, and a process that puts the burden entirely on the borrower to figure it out.”
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