npr:
A critical new report from the U.S. Department of Education’s Office of Inspector General finds the department’s student loan unit failed to adequately supervise the companies it pays to manage the nation’s trillion-dollar portfolio of federal student loans. The report also rebukes the department’s office of Federal Student Aid (FSA) for rarely penalizing companies that failed to follow the rules.
Instead of safeguarding borrowers’ interests, the report says, FSA’s inconsistent oversight allowed these companies, known as loan servicers, to potentially hurt borrowers and pocket government dollars that should have been refunded because servicers weren’t meeting federal requirements.
“By not holding servicers accountable,” the report says, “FSA could give its servicers the impression that it is not concerned with servicer noncompliance with Federal loan servicing requirements, including protecting borrowers’ rights.”
The Education Department’s independent watchdog reviewed FSA oversight records from January 2015 through September 2017, a period that includes both the Obama and Trump administrations. Among the Inspector General’s findings: While FSA did document servicers’ many failures to follow the rules, it did not study these isolated failures to identify broader patterns of noncompliance that could have hurt many more students.
Federal Watchdog Issues Scathing Report On Ed Department’s Handling Of Student Loans
Illustration: Hanna Barczyk for NPR
