Cleaver and Bishop Call for GAO Investigation
November 4, 2017
Congressman Emanuel Cleaver, II (D-MO) and Congressman Sanford Bishop (D-GA) recently called on the U.S. Government Accountability Office (GAO) to investigate the Department of Education’s student loan services and industry practices. In a letter to the Comptroller General, Gene Dodaro, the Congressmen requested that the GAO examine whether the Department of Education has implemented changes to its contract incentives and customer support processes to better provide support for its student loan borrowers. The letter can be found here.
Congressman Cleaver held a town hall in his district in Kansas City, Missouri in August of 2017. At that town hall, constituents discussed the rising costs of student loan debt, and the continued lack of transparency with the implementation, collection, and servicing of student loans.
“Student debt affects approximately 44 million Americans who are holding about $1.3 trillion in debt. There continues to be a deluge of complaints regarding transparency in student lending,” said Congressman Cleaver.
Previously, GAO looked into the Department of Education’s management of the Student Loan program, and in a report released in May of 2016, the GAO found there was a need for improved Direct Loan customer service and oversight.
GAO found that the Dept. of Education lacked a minimum set of standards for call center hours for providing effective customer service, as well as key weaknesses in the management of the Direct Loan Program. Specifically, servicers are rewarded based on performance metrics in their contract. The Department of Education rewards servicers with additional loans for each loan serviced. This method of compensation does not align with the goal of superior loan servicing as desired by the Department of Education.
“These finding are of great concern to us. We have requested that GAO provide an update to this review to evaluate if the Department of Education has made modifications to their Direct Loan Program,” said Congressman Cleaver.
Given the critical need for transparency when taxpayer dollars are being used to help finance higher education, this review will help Congress and Department of Education to better align incentives and create the necessary changes to support borrowers.