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Demanding Accountability for Student Borrowers and Taxpayers

The Department of Education’s Office of Federal Student Aid (FSA) has a record—and it’s not one to brag about. Designated a performance-based organization by Congress, FSA has an obligation to set and meet clear and measurable goals, customer service standards, and performance targets. Unfortunately, the organization has routinely failed to live up to those responsibilities at the expense of taxpayers, student borrowers, and the institutions that serve them.

In fact, a survey of student aid professionals by the National Association of Student Financial Aid Administrators found:

In recent years, the relationship between schools and FSA has been strained with the increased growth in regulatory and operational burdens placed on schools and an increase in oversight activity by FSA, all of which leave schools feeling less like partners and more like adversaries. This tension has been exacerbated by a double standard where schools are required—and in some cases threatened—to meet aggressive and often unrealistic deadlines, while [the Department of Education] continually falls short of meeting their own timelines.

And that’s not all. For years, concerns have been raised about FSA’s long history of mismanagement:

  • Witnesses at a joint committee hearing described weaknesses within the agency that undermine its effectiveness and have led to a lack of communication with borrowers, colleges and universities, and loan servicers; difficulty streamlining student services; and trouble delivering the appropriate amount of aid to eligible students on time.

  • A report by the Government Accountability Office (GAO) revealed that limited planning and oversight in upgrading the agency’s Debt Management and Collection System led to an inability to “provide most borrowers who completed loan rehabilitation with timely benefits, such as removing defaults from their credit reports, for more than a year” after the upgrade.

  • Another GAO report concluded that “customer service for borrowers and management of the Direct Loan program leave the agency unable to ensure that student loan borrowers are well-served.”

  • In separate reports the Department of Education’s Office of Inspector General said FSA was not fulfilling its planning and reporting responsibilities, identified more than $1 billion in defaulted loans that could not be rehabilitated due to unaddressed contractor issues, and outlined a pattern of IT security shortcomings.
Now, instead of focusing on areas in need of improvement within FSA, the department is moving forward with a half-baked idea that will fundamentally change the way student loans are independently serviced. While it may have put forward an interesting concept, the department’s proposal will not fix the problems that have long plagued FSA. And it certainly hasn’t proven to be ready for such an undertaking.

That’s why leaders on the Education and the Workforce Committee are expressing concerns. In a letter sent earlier today to Secretary of Education John King, Chairman John Kline (R-MN) and higher education subcommittee chairwoman, Rep. Virginia Foxx (R-NC), write:

Given FSA’s failures in contract procurement, management, and oversight, as well as its demonstrated inability to meet statutory requirements as a performance-based organization and maintain proper IT security, we are concerned … [We] have no confidence in the Department’s ability to complete this project without delay, service interruptions, and harm to borrowers.

With a record like FSA’s, the cause for concern is clear. That’s why it is vitally important to hold the agency accountable and ensure this initiative isn’t just another item on a long list of missed opportunities. Students and the taxpayers who support them deserve better, and committee Republicans will continue to demand exactly that.

NOTE: The letter to Secretary King is available here.