Education halved its staff and stopped checking $1.6 trillion in loans
Summary
Two March 2025 workforce-reduction actions at the Department of Education, examined in separate January and March 2026 GAO reports on two different offices, produced the same shape: money spent with nothing to show for it, and oversight abandoned rather than replaced. Federal Student Aid stopped checking, in February 2025, whether the companies servicing $1.6 trillion in student loans were keeping accurate records or giving borrowers good information -- a metric that had just caught four of five servicers failing and cost them $850,000 in penalties. The Office for Civil Rights, meanwhile, spent $28.5 million to $38 million paying staff to sit on administrative leave through a reduction-in-force that courts blocked, unblocked, and Education ultimately rescinded -- without ever producing the cost-savings accounting its own workforce-reduction guidance required.
The oversight FSA dropped, and what it had just found
's five loan servicers operate under contracts, put in place in April 2024, that grade them on six metrics -- accuracy, call quality, call-abandon rate, customer satisfaction, timeliness, and financial monitoring -- with real money attached: can withhold up to 5 percent of a servicer's bill per failed metric, capped at 20 percent overall, rising 50 percent for each repeated failure. In the two quarters graded accuracy and call quality before dropping both, four of the five servicers failed the accuracy standard at least once, two of them hit the maximum 5 percent penalty, and withheld $850,000 total. All five servicers passed call quality in that same window. One of the accuracy failures caught: a servicer that hadn't cleared credit balances for about 90 percent of a sampled group of borrowers within the required 45 days -- a finding that pushed the servicer into a corrective action plan.
View data as table
| FSA staff, January 20, 2025 | 1,433 |
|---|---|
| FSA staff, December 1, 2025 | 777 |
That accuracy metric wasn't cosmetic. Education's own independent financial auditor flagged material weaknesses in fiscal years 2023 and 2024 over the reliability of loan-status data the department uses to estimate the program's lifetime costs -- including errors in the very servicer-reported records the accuracy metric was built to catch. has offered no replacement. Officials said in September 2025 they were exploring more efficient, data-driven monitoring; as of December 2025, nothing had changed and no new method was in use. recommended resume assessing accuracy and call quality. Education disagreed, arguing the two metrics don't meaningfully measure servicer performance and that its other tools -- data quality checks, audits, complaint reviews, leadership meetings -- add up to a better strategy. wasn't persuaded, and stood by the recommendation.
View data as table
| Failed accuracy standard in at least one quarter | 4 |
|---|---|
| Penalized at the maximum 5% rate | 2 |
| Met accuracy standard both quarters | 1 |
The other office, the same reduction, a different kind of unaccounted cost
Federal Student Aid was one of three Education offices -- along with the Office for Civil Rights () and the Institute of Education Sciences -- that together accounted for about 70 percent of the roughly 1,250 staff named in the March 2025 reduction-in-force. At , which enforces civil rights laws at schools and colleges, 299 of about 575 staff (a little over half) were placed on paid administrative leave and barred from working, and the agency closed 7 of its 12 regional offices. What followed was months of litigation: a district court injunction in May 2025, a second injunction specific to in June, a Supreme Court stay of the first in July, an appellate stay of the second in September, 137 more RIF notices during the October government shutdown, and a full pause in late November -- before Education rescinded the entire action in early January 2026.
View data as table
| Mar. 21-Sept. 5, 2025 (low estimate) | 18 |
|---|---|
| Mar. 21-Sept. 5, 2025 (high estimate) | 24 |
| Sept. 8-Dec. 12, 2025 (low estimate) | 10.5 |
| Sept. 8-Dec. 12, 2025 (high estimate) | 14 |
Education told courts it was paying roughly $1 million a week in salary and benefits for the sidelined staff. used that figure to estimate $18 million to $24 million for the first 24 weeks and another $10.5 million to $14 million for the next 14 -- $28.5 million to $38 million total, paid out while the reduction sat in legal limbo and, ultimately, never took effect. Federal guidance required Education to document the RIF's expected costs and savings in a plan due March 13, 2025, before any of that litigation happened. Officials told they'd analyzed the numbers but never wrote them down, calling the situation "evolving and deliberative." 's response: the documentation was due before the situation started evolving. Meanwhile, 's complaint caseload kept growing anyway -- 9,269 complaints in, 7,072 resolved (90 percent by dismissal), a net gain of about 98 open cases a week.
What each office told GAO, and what GAO said back
Education rejected both recommendations. On , it argued its remaining oversight tools are a superior substitute for the accuracy and call-quality metrics it dropped. On , it argued that rescinding the RIF made a cost-and-savings accounting moot. didn't accept either answer: the borrower-facing metrics measure something the substitutes don't, and the RIF's costs were already incurred regardless of whether the layoffs were ultimately reversed. Officials also told in December 2025 that Education remained committed to pursuing the reduction again -- meaning the same accounting gap could recur.
The takeaway
- dropped oversight right after it proved necessary. In the last two quarters it checked, accuracy reviews caught four of five loan servicers failing the standard and assessed $850,000 in penalties -- then stopped checking, citing the same staffing cuts that took it from 1,433 to 777 people, and had no replacement in place as of December 2025, the most recent information reviewed.
- A separate office spent tens of millions on a reduction that never happened. paid an estimated $28.5 million to $38 million in salaries and benefits to keep 299 staff on leave and barred from working through a legal fight that ran from May 2025 to Education's rescission of the RIF in early January 2026.
- Neither office has to show its math. Education disagreed with 's recommendation to resume servicer oversight and disagreed with 's recommendation to document the RIF's actual costs and savings -- even as officials said they intend to try the same workforce cuts again.
Federal Student Aid's staffing reduction, servicer oversight findings, and penalty data are from -26-108534, 'Federal Student Loans: Education Needs to Address Gaps in Servicer Oversight' (March 5, 2026), read directly and in full. The Office for Civil Rights reduction-in-force's timeline, cost estimates, and caseload data are from -26-108320, 'Department of Education: Full Costs and Savings Estimate Needed for Reduction-in-Force and Restructuring of the Office for Civil Rights' (January 29, 2026), also read directly and in full. Both reports examine the same March 2025 department-wide reduction-in-force at different offices; neither report cross-references the other's specific findings, though both describe the same underlying executive order and / guidance.
Sources(2) ▾
- U.S. Government Accountability Office, Federal Student Loans: Education Needs to Address Gaps in Servicer Oversight (2026-03-05) — -26-108534, a report to congressional requesters (Senate HELP Committee and House Education and Workforce Committee ranking members) examining the impact of Department of Education workforce reductions on Federal Student Aid's oversight of loan servicers. Read in full directly from the PDF via the Wayback mirror (direct gao.gov fetch blocked with HTTP 403). gao.gov · original document
- U.S. Government Accountability Office, Department of Education: Full Costs and Savings Estimate Needed for Reduction-in-Force and Restructuring of the Office for Civil Rights (2026-01-29) — -26-108320, a report to the Ranking Member, Senate HELP Committee, examining the same March 2025 Department of Education reduction-in-force at a different office (Office for Civil Rights) than doc-gao-fsa-108534. Read in full directly from the PDF via the Wayback mirror (direct gao.gov fetch blocked with HTTP 403). gao.gov · original document
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Starting January 2025, the Department of Education cut its roughly 4,100-person workforce by about half. At the Office of Federal Student Aid (), which oversees $1.6 trillion in federal student loans, staff fell from 1,433 to 777 -- a 46 percent cut, according to a March 2026 GAO report⧉. In February 2025, citing that shortage, stopped checking whether its five loan servicers were keeping accurate records or giving good customer service on the phone -- a metric that had just caught four of five servicers failing and cost them $850,000 in penalties. At the Office for Civil Rights, a January 2026 GAO report⧉ on the same department-wide reduction found Education spent $28.5 million to $38 million paying 299 staff to sit on administrative leave, barred from working, through a reduction-in-force blocked and unblocked repeatedly by courts before Education rescinded it in early January 2026 -- without ever producing the documented cost-savings analysis its own guidance required.