The federal system that checks whether companies managing student loans keep accurate records and give correct guidance to borrowers was significantly scaled back when the Office of Federal Student Aid (FSA) halted two central reviews in February 2026. Those suspended activities — assessments of accuracy of servicer records and of call quality — are key tools for ensuring borrowers receive correct information and for holding contractors accountable. With roughly 43 million people holding federal student loans and major repayment changes on the horizon, the interruption in these checks has practical consequences for both borrowers and taxpayers.
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What monitoring stopped and why it matters
Under existing contracts, FSA is tasked with quarterly performance reviews covering multiple metrics such as accuracy, call quality, customer satisfaction, timeliness and financial monitoring. The accuracy checks compare servicer-held borrower data to FSA’s central records to detect mismatches, while the call quality reviews listen to recorded interactions to verify that servicer staff provide correct guidance. In February 2026 the agency stopped performing those two labor-intensive checks, citing a loss of staff capacity after headcount fell from 1,433 to 777 by December 2026 — a reduction the agency says stems from staffing directives to shrink the department.
Which servicer functions were affected
The companies contracted to service federal loans — including Aidvantage, CRI, EdFinancial, MOHELA, and Nelnet — manage billing, payment processing and borrower communications. Without independent verification of the data accuracy and recorded call interactions, the government cannot confirm whether borrower accounts are correctly coded, whether payments are applied properly, or whether staff are giving accurate repayment and forgiveness guidance. That gap removes the primary mechanism that triggers financial penalties for poor performance.
Evidence of problems before the pause
Prior to the suspension, oversight work had already exposed weaknesses. In the last two quarters assessed before the halt, four of the five federal servicers failed to meet accuracy standards and incurred roughly $850,000 in contractual penalties, with two firms hitting the maximum penalty threshold. Separately, the Department of Education’s independent auditor reported in January 2026 that the department still had a material weakness tied to the reliability of student loan data. Those findings underscore the risk that errors may persist or grow without continued review.
Direct impacts on borrowers
When servicer records are incorrect, borrowers can be misclassified into inappropriate repayment statuses, billed wrong amounts, or miss refunds and relief. Poor call quality can compound this: a borrower may be reassured during a phone call yet receive inaccurate instructions about enrollment in programs or about loan status. That risk is particularly acute for the nearly 7 million people who were in the SAVE repayment plan and must navigate upcoming transitions, as well as others approaching default or needing help enrolling in new programs.
Fiscal accountability and the response from FSA
The absence of those two assessments also creates a fiscal concern: without verification, FSA cannot reliably determine whether servicers met contractual obligations and whether penalty structures should apply, increasing the possibility of overpaying for substandard work. The Government Accountability Office recommended resuming the accuracy and call quality reviews. FSA disagreed, saying it is shifting to different oversight tools such as data quality checks, cross-system validation, borrower satisfaction surveys, and regular executive-level reporting. Agency leaders have described visits to servicer operations and said they are exploring more efficient methods, but the GAO found no replacement approach had been implemented as of December 2026.
What comes next and why it matters
Policymakers and watchdogs warn that without independent audits that actually review calls and compare systems, there is no reliable way to confirm prior problems were fixed or to detect new issues. Lawmakers have called for resumption of the halted reviews, arguing that legal obligations require the department to ensure borrowers get accurate information. With major program changes such as the incoming Repayment Assistance Plan (RAP) scheduled to affect repayment options starting in July 2026, restoring rigorous, independent oversight will determine whether borrowers receive correct guidance and whether taxpayer funds are safeguarded.