Student-loan servicers said they would benefit from better coordination with the Department of Education.
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Your student-loan servicer wants more help carrying out the sweeping changes from the Department of Education.The Government Accountability Office released a report on Thursday that delved into the coordination between four federal student-loan servicers and the Education Department. It found that the servicers — Nelnet, Aidvantage, MOHELA, and EdFinancial — reported challenges implementing program changes from the department, citing a "lack of clear up-front instruction" that has sometimes led to "extensive back-and-forth," the report said.The lack of clear instructions has caused delays in communicating with borrowers, leading to administrative errors and incorrect billing information that take time for the servicer to remedy. "The instruction Education provides to servicers on changes to the student loan program is critical to ensuring smooth operations and good customer service for these borrowers," the report said.The GAO recommended that the Federal Student Aid office develop criteria for determining when it should initiate early conversations with servicers to prepare for coming changes, particularly those that are complex or need to be implemented within a tight timeframe.One servicer told the GAO that the department gave it one business day to update how borrowers can track their total number of payments toward loan forgiveness, leaving insufficient time to prepare for an influx of calls about the change.The Education Department said in its response to the GAO's report that it disagreed with the recommendation to develop criteria for early coordination with servicers. Mell Brittian-Smith, acting executive director of the Office of Loan Portfolio Management, said that establishing a formal criterion would "be fraught with challenges and risks," given that complexity for loan and repayment changes can vary.
