Key facts
- Federal student loan servicers are experiencing payment errors and customer service delays.
- A Government Accountability Office report identified a lack of clear instructions from the Department of Education as a cause.
- Servicers Nelnet, Aidvantage, MOHELA, and EdFinancial reported difficulties implementing program changes.
- The GAO recommended the Department of Education develop criteria for early coordination with servicers on program changes.
- The Education Department disagreed with the GAO's recommendation, citing potential challenges and risks.
- Borrowers have reported issues with new income-driven repayment plans and borrowing caps.
Federal student loan servicers are struggling to implement program changes from the Department of Education, leading to payment errors and customer service delays for borrowers, according to a new report from the Government Accountability Office (GAO).
The GAO found that servicers, including Nelnet, Aidvantage, MOHELA, and EdFinancial, reported challenges due to a "lack of clear up-front instruction" from the department. This has resulted in "extensive back-and-forth" and delays in communicating with borrowers, causing administrative errors and incorrect billing information that servicers then must remedy.
The report emphasized that clear instructions from the Education Department are critical for smooth operations and good customer service. One servicer noted receiving only one business day to update how borrowers track payments toward loan forgiveness, leaving insufficient time to prepare for increased calls.
The GAO recommended that the Federal Student Aid office develop criteria for initiating early conversations with servicers to prepare for upcoming changes, especially complex ones or those with tight deadlines. However, the Education Department disagreed with this recommendation, with Mell Brittian-Smith, acting executive director of the Office of Loan Portfolio Management, stating that establishing a formal criterion would "be fraught with challenges and risks" due to the varying complexity of loan and repayment changes.
Despite the department's stance, an official told the GAO in December 2025 that they had proactively sought input from servicers on draft changes for new repayment plans, which helped revise requests and ease implementation. Borrowers have recently reported challenges with President Donald Trump's student-loan repayment overhaul, including incorrect payment information and long customer service hold times. These issues, however, predate the current administration, as servicers faced penalties under former President Joe Biden for failing to meet obligations, including delivering inaccurate billing statements after the pandemic-era pause.