Report calls on Department of Education to give more guidance on student loan process
As student loan debt in the U.S. reaches about $1.75 trillion, a new watchdog report is calling on the federal government to improve its guidance on the federal student loan process.
According to the report from the U.S. Government Accountability Office (GAO), the recommendations for the U.S. Department of Education focus on “providing instructions and guidance to student loan servicers and evaluating the effectiveness of federal student aid efforts.”
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The goal is to make sure that student loan borrowers don’t miss out on available resources and are properly using their options wisely.
“What we found was that servicers are doing things differently,” said Melissa Emrey-Arras, a Director for GAO. “There are multiple servicers. Borrowers don’t get to choose their servicer, and you can have borrowers in very similar situations in terms of their finances being given very different information and very different monthly payments based on the servicer that they received, and the reason was that there was no consistent guidance.”
RELATED: More than 40 million Americans carry student loan debt today, totaling roughly $1.75 trillion
Tens of millions of Americans are now paying off student loans.
Pam Millbrook knows about it all too well.
“I now have about $150,000 worth of student loans,” said Millbrook. “I’ll be paying them until I’m like 90.”
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Millbrook said the process to apply for and receive federal student loans was difficult and confusing.
In the end, she said she ended up in a mountain of debt.
“Right now, my student loan payments are $,1500 a month which is more than my mortgage,” Millbrook said. “The whole thing is a hot mess. They need to do better with the program itself.”
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According to the report, the Department of Education agreed with recommended changes to strengthen the management of the Direct Loan Program and has taken steps to implement the changes as of April 2022.
“Education has taken steps to improve how it provides guidance to servicers and has issued guidance to improve clarity on some issues, such as how servicers should apply overpayments to a borrower’s student loan balance,” the report said.
“The idea is really to provide consistent government service to student loan borrowers so that regardless of their servicer, they are treated the same,” said Emrey-Arras.
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