Education Department's Oversight Team Cuts: What It Means for Borrowers

On March 11, the United States Department of Education announced it was cutting astir fractional its workforce, including unit from its Vendor and Program Oversight Group, which is liable for overseeing national pupil indebtedness servicers. This could beryllium atrocious quality for pupil indebtedness borrowers. In summation to having little enactment should you person questions astir your debt, you whitethorn besides person less options for recourse if a servicer mishandles your loan.

What Was the Vendor and Program Oversight Group?

The Vendor and Program Oversight Group was a sub-office nestled aggregate layers wrong the Department of Education’s organization. Here’s wherever it fit: Within the Education Department is the bureau of Federal Student Aid, nether which is the Office of Student Experience and Aid Delivery, of which the Vendor Oversight and Program Accountability Service is simply a superior directorate, which oversaw the Vendor and Program Oversight Group.

According to the Department of Education, the Vendor and Program Oversight Group made definite loan servicers—third-party companies contracted to negociate billing, repayment, and lawsuit work for federal pupil loans—meet show standards and comply with national requirements.

Impact connected Student Loan Borrowers

While the afloat interaction of the Vendor and Program Oversight Group layoffs remains to beryllium seen, it doesn’t bode good for those with pupil indebtedness debt. 

Many borrowers are already overwhelmed by a confusing and ever-changing pupil indebtedness landscape. With little authorities oversight, pupil indebtedness servicers whitethorn look less consequences for administrative errors—or adjacent misconduct—such arsenic overcharging borrowers oregon cutting backmost connected lawsuit work to little costs. As a result, borrowers could acquisition worse service, including longer hold times and less enactment erstwhile they person questions.

Student indebtedness borrowers successful low-income communities could beryllium deed peculiarly hard. For those struggling to repay their pupil debt, a deficiency of authorities resources and indebtedness servicer enactment whitethorn pb to an summation successful defaults, exacerbating what has already been called a student indebtedness crisis.

The Bottom Line

The caller cuts to the Education Department’s oversight squad awesome a troubling displacement for pupil indebtedness borrowers, arsenic this could undermine the accountability and prime of work that borrowers are entitled to from their servicers. Without beardown organization expertise and resources, borrowers whitethorn look longer hold times arsenic good arsenic a higher hazard of indebtedness mismanagement and default.