More than 30 million U.S. student loan accounts are at risk of shoddy maintenance, according to a new report released by the U.S. Department of Education Office of Inspector General earlier this month.
The office investigated the actions of nine companies tasked with servicing the Federal Student Aid program over a 2½-year period beginning January 2015. The report found two recurring problems at the companies: Loan servicer representatives failed to explain all repayment options to borrowers, and they miscalculated monthly payments under certain plans. “Borrowers might not have been protected from poor services,” the report states, “and taxpayers might not have been protected from improper payments.”
The report also found the companies had a lack of consistency and quality control in their interactions with borrowers and a culture of lackadaisical enforcement. Numerous infractions received a simple slap on the wrist with little-to-no enforcement or follow-through.
The Department of Education disputed the findings but agreed to follow the report’s recommendations.
“We fundamentally disagree with the [inspector general’s] assertion that we do not have processes and procedures in place to ensure loan servicing vendors provide high-quality, compliant service to borrowers,” said Liz Hill, an Education Department spokeswoman. “That said, we also are continuously looking for ways to improve.” —L.E.