Report asks Department of Education for more guidance on student loan process
As student loan debt in the United States reaches an estimated $1.75 trillion, a new watchdog report calls on the federal government to improve its guidelines on the federal student loan process.
According to the U.S. Government Accountability Office (GAO) report, the recommendations to the U.S. Department of Education focus on “providing instruction and guidance to student loan servicing officers and assessing effectiveness of federal student aid efforts”.
The goal is to ensure that student borrowers do not run out of available resources and properly use their options wisely.
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“What we’ve found is that repairers are doing things differently,” said GAO director Melissa Emrey-Arras. “There are several service providers. Borrowers can’t choose their servicing agent, and you may have borrowers in very similar financial situations who receive very different information and very different monthly payments depending on which servicing agent they have received, and the reason was that there was no consistent advice.
Tens of millions of Americans are now repaying their student loans.
Pam Millbrook knows this all too well.
“I now have about $150,000 in student loans,” Millbrook said. “I’ll pay them until I’m 90.”
Millbrook said the process of applying for and receiving federal student loans was difficult and confusing.
In the end, she said she found herself in a mountain of debt.
“Right now my student loan payments are $1,500 a month, which is more than my mortgage,” Millbrook said. “This is all a hot mess. They need to do better with the program itself.
According to the report, the Ministry of Education has accepted the recommended changes to strengthen the management of the direct lending program and has taken steps to implement the changes from April 2022.
“Education has taken steps to improve the way it provides guidance to servicers and has released guidance to improve clarity on certain issues, such as how servicers should apply overpayments to student loan balances. of a borrower,” the report said.
“The idea is really to provide a consistent government service to student borrowers so that regardless of who they are, they are treated the same,” Emrey-Arras said.
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