Student-loan borrowers are facing payment errors and customer service delays. A new federal report offers a solution.

A new Government Accountability Office (GAO) report reveals student-loan servicers are grappling with payment errors and delayed customer service due to insufficient coordination with the Department of Education. The four major servicers – Nelnet, Aidvantage, MOHELA, and EdFinancial – reported difficulties implementing changes from the Education Department, citing a "lack of clear up-front instruction" that often resulted in "extensive back-and-forth" and administrative errors.

The report recommends the Federal Student Aid office establish criteria for determining when to initiate early conversations with servicers to prepare for changes, especially those complex or with tight implementation timelines. One servicer mentioned receiving just a single business day to update borrowers' payment tracking for loan forgiveness, leaving little time to prepare for increased calls about the change.

Contrarily, the Department of Education disagreed with the GAO's recommendation, stating that establishing formal criteria for early coordination would be "fraught with challenges and risks" as the complexity of loan and repayment changes varies. Despite this disagreement, the Department did proactively seek feedback from servicers on draft changes related to new repayment plans, enabling them to revise requests and streamline implementation.

Over the past month, servicers have been implementing President Trump's student-loan repayment overhaul, including new income-driven repayment plans and borrowing caps. While borrowers have reported various issues due to the changes, such as incorrect payment information and long customer service wait times, these challenges predate the Trump administration.

Under President Biden, the Department of Education penalized servicers for failing to meet contractual obligations, including providing inaccurate billing statements to borrowers.