Warning Issued Over Student Loan ‘Failures’ Under Trump Admin - Newsweek

A coalition of 89 organizations representing student borrowers is urging Congress to launch emergency oversight hearings into what they say is widespread student loan servicing failures.

Amid the Trump administration's ongoing overhaul of the federal student loan system, the groups sent a letter to Congress Monday warning that millions of borrowers are facing "unprecedented levels of confusion, misinformation, servicing errors, and administrative failures" as the Department of Education implements major changes enacted through the One Big Beautiful Bill Act.

“We, the undersigned 89 organizations representing millions of students, borrowers, workers, veterans, people of color, people with disabilities, and consumers write to sound the alarm on the unprecedented levels of confusion, misinformation, servicing errors, and administrative failures that millions of student loan borrowers are being forced to navigate as implementation of the One Big Beautiful Bill Act continues,” the letter said.

“We urgently call for your respective committees to engage in critical oversight and convene an emergency hearing in order to protect borrowers and hold the U.S. Department of Education and its student loan servicers accountable.”

The letter comes as millions of Americans are navigating significant changes to federal student loan repayment programs.

The Trump administration has been phasing out the Biden-era SAVE repayment plan and transitioning borrowers into new repayment options, a process that has generated some errors and delays.

Student loan issues can have major financial consequences for borrowers, leading to more debt in the long term and credit score damage.

The organizations are calling for Congress to convene an emergency hearing to investigate problems within the federal student loan system and hold the Education Department and loan servicers accountable.

“Allegations abound regarding incorrect loan amounts on websites, miscalculations of loan-forgiveness credits, and, not to mention, many borrowers being locked out of their accounts previously due to issues with online access,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek.

“With the amount of changes and the dismantling of the Department of Education, one could say many saw this coming, but when the reality hits, it becomes more of a bitter pill to swallow.”

“Borrowers are being pushed through enormous repayment changes at the same time the system responsible for implementing them has reduced some of its basic oversight,” Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek.

“Picture someone working toward Public Service Loan Forgiveness who has done everything right for years. They log in one morning and qualifying payments have disappeared. Or a borrower still in forbearance suddenly gets a past due warning. Now they aren't making a financial decision. They're trying to figure out whether the government's own records are correct.”

Newsweek reached out to the Department of Education for comment via email.

The administration has defended the repayment overhaul, saying that the changes are intended to simplify a complicated repayment system and strengthen accountability on borrowers.

“These organizations are staffed in part by former Obama and Biden administration officials and have spent years shilling for Democratic priorities yet were largely silent while the previous administration’s higher education agenda produced a botched FAFSA rollout, borrower confusion, and student-loan policies that repeatedly failed in court,” Ellen Keast, the communications director for the Department of Education Under Secretary, told Newsweek.

“Now they want to criticize an administration that is cleaning up those failures and implementing historic reforms to simplify repayment, strengthen accountability and better connect federal aid to workforce needs. We’re focused on fixing problems for students, not taking lectures from partisan advocates who stood by while those problems were created.”

Among the groups that signed the letter are Protect Borrowers, the AFL-CIO, the American Federation of Teachers, the National Education Association, the NAACP and the United Auto Workers.

The organizations are asking leaders of major House and Senate committees responsible for education and financial services oversight to investigate the reported problems, but it’s unclear if any real change will take place.

“For borrowers, an admin error can become a higher payment, delayed forgiveness, a default problem or potentially damaged credit,” Ryan said. “Repeated errors make every new repayment change harder because borrowers can't confidently plan around the information they're receiving.”

It is now up to the congressional committees to decide whether to hold the emergency hearings requested in the letter.

“As millions transition out of SAVE and into new repayment arrangements, I would expect continued disputes & corrections unless the underlying servicing and oversight problems are fixed,” Ryan said.

Newsweek’s reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here.

Contact Newsweek editors on this story: Jason Lemon and Dave Siminoff.