By Chris Hicks | June 11, 2026
Student loan servicers—the companies responsible for sending and receiving monthly student loan payments, processing paperwork, and providing customer service to student loan borrowers—are pretty notorious for being bad at… well, sending and receiving monthly student loan payments, processing paperwork, and providing customer service to student loan borrowers. They average a one–star review (out of five) in customer ratings with the Better Business Bureau. For decades, student loan servicers have engaged in widespread and serious harms, including guiding borrowers into programs that cost borrowers billions of dollars in unnecessary interest charges when they were eligible for affordable repayment plans and misleading borrowers about debt relief options. Despite these dismal outcomes, the U.S. Department of Education continues to pay these companies more than a billion dollars every year.
Now, the stakes are even higher. Beginning July 1, 2026, 7.5 million student loan borrowers enrolled in the Saving on a Valuable Education (SAVE) plan will be notified by their student loan servicer that they will have 90 days to switch to a new repayment plan. With more than 530,000 Income-Driven Repayment applications currently sitting unprocessed, this backlog is almost certain to balloon into the millions. This means that the servicers standing between 7.5 million borrowers and default are the same companies that have spent decades driving borrowers into it.
Operating With Impunity
Little is known about the performance of these servicers. It has been more than a year since the Department carried out a quarterly performance review of its student loan servicers. And it has been over a year since it reviewed the accuracy of loan servicers’ records, including monitoring phone calls to ensure borrowers are receiving accurate information from servicers when seeking repayment assistance. That’s despite the fact that a Government Accountability Office (GAO) report found that prior to the Department discontinuing quarterly servicer assessments in early 2025 due to “lack of FSA staff capacity” following the cuts made by the Trump Administration, most servicers did not meet the performance standards for accuracy, resulting in the companies facing financial penalties. The outlook for oversight from the Consumer Financial Protection Bureau (CFPB) is similarly grim. CFPB’s Student Loan Ombudsman position, a role intended to police servicer misconduct, is currently held by a former financial services lobbyist, and the agency has publicly stated it is deprioritizing student loans in both enforcement and supervision.
Today, Protect Borrowers and the Debt Collection Lab at Princeton University published a report that includes an overview of these student loan servicers, using government and congressional oversight reports, the final Department of Education servicer performance reports and servicer specific data, and the “Annual Servicer Activity Reports” published by the District of Columbia Student Loan Ombudsman. See below to learn more about the student loan companies driving the system today.
Accountability is Needed More Than Ever
Unfortunately for borrowers, this snapshot shows that little has changed as they continue to experience billing errors, improper denials for loan forgiveness, and extended wait times when they call their servicers to address problems as they arise.
Student loan servicers are failing, and borrowers are paying the price. Today, millions of student loan borrowers are struggling amidst the worsening affordability crisis, as the rising costs of groceries, utilities, and healthcare continue to bury families in debt. At the same time, an unprecedented wave of student loan defaults is hitting millions of American households who are rapidly falling behind on their student loan payments, with a borrower defaulting every nine seconds in 2025. Protect Borrowers’ previous analysis of government data found that by the end of 2025, nearly 9 million student loan borrowers had defaulted nationwide.
Now there is growing concern that the 7.5 million borrowers being forced out of the SAVE plan could be the next major wave of borrowers heading towards a default cliff. Further sowing confusion and concern among borrowers, the Department announced in March 2026 that it plans to transfer the entire federal student loan portfolio and oversight of servicers to the U.S. Department of the Treasury amid a sea of other policy changes, including eliminating borrower protections, making repayment options more expensive, and limiting access to federal aid for some professions like nursing. Lawmakers and regulators at every level must take action to protect borrowers from servicers’ widespread errors and poor customer service, as millions of borrowers are required to switch repayment plans in a matter of weeks.
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Chris Hicks is a Senior Policy Advisor at Protect Borrowers. For more than a decade he has written about student loan servicers, their widespread abuses, and the Department’s unwillingness to hold them accountable.