Months after the Inspector General of the Department of Education issued a scathing report on the agency’s oversight of loan servicers, Sen. Elizabeth Warren, D-Massachusetts, is demanding information from the head of the agency’s Federal Student Aid (FSA) office about his plans to hold student loan servicers and contractors accountable.
“Based on the massive size of this loan portfolio, FSA is essentially the country’s fifth largest bank and the world’s largest student loan bank,” wrote Warren in her letter to General Mark Brown, the fourth person to lead the FSA during the Trump Administration. “Yet, FSA has repeatedly failed borrowers and taxpayers. You have a great deal of work to do to improve FSA.”
The office oversees about $1.5 trillion in federal student loan debt held by 44 million Americans. over 40 million. Roughly 8.6 million of those borrowers are in default on $150 billion in federal student loans.
According to the inspector general’s report, the FSA failed to track all instances of noncompliance with federal law and rarely held servicers accountable and failed to collect all the information necessary to ensure that servicers were acting in compliance with federal law.
Among the particulars: servicers often failed to inform borrowers of available repayment options, including income-driven repayment plans and often miscalculated repayment amounts so that they were not affordable for borrowers.