March 01, 2016

Murray, Warren, Blumenthal Respond to Oversight Report on Education Department’s Student Loan Servicers’ Compliance Review

The Senators raised concerns with the Department’s initial review in August

Washington, DC - Today, Senator Patty Murray (D-WA), the top Democrat of the Health, Education, Labor, and Pensions (HELP) Committee, Senator Elizabeth Warren (D-MA), and Senator Richard Blumenthal (D-CT) responded to the report from the Education Department's Office of Inspector General (OIG), examining the Department's review of student loan servicers' compliance with the Servicemembers Civil Relief Act (SCRA). The senators requested the OIG report and released a Warren staff report in August to raise concerns with the methodology of the Department's review and about whether it adequately identified servicemembers who had been overcharged.

Among other findings the OIG report shows the Department's initial review and subsequent materials it released were statistically flawed, inaccurate, and invalid. In addition, the military borrowers who were overcharged on their student loans have not been refunded their money, and the OIG report notes that "the Department stated that it was a management decision not to require further corrective actions." 

"In 2014, when I called for the Department of Education to investigate student loan servicers that had violated the law by overcharging men and women in uniform, I made clear that servicemembers deserved a thorough investigation of wrongdoing," Senator Murray said. "Instead, the initial review from the Department used a deeply flawed methodology and papered over mistreatment of military borrowers, as the Department's own inspector general has made clear. Years later, this problem has not been fixed. One servicemember cheated on their student loans is one too many. I will continue to hold the Department accountable for protecting military borrowers and ensuring proper oversight of the federal student loan program so these violations never happen again."

"Today's report is a stunning indictment of the Department of Education's oversight of student loan servicers, exposing the extraordinary lengths to which the Department will go to protect these companies when they break the law," Senator Warren said. "The thousands of servicemembers who were cheated deserve far better, ‎and these findings raise serious questions about whether the Department and its Office of Federal Student Aid can be trusted to protect the millions of borrowers under its care. We need to get to the bottom of how this happened - and who allowed it to happen - to ensure that it never happens again." 

"This shocking report reveals a shameful abdication of responsibility by the Department of Education," said Senator Blumenthal. "Faced with the task of ensuring that student loan servicers had not taken advantage of the men and women who serve our country, the Department conducted a sham study that raises serious questions about its oversight of this area. These servicemembers deserve a thorough accounting of servicer behavior and a guarantee that any servicemember who was denied their SCRA benefits will be made whole."

In 2014, allegations surfaced that the student loan servicer Sallie Mae, now named Navient, had been overcharging servicemembers on the interest for their student loans. SCRA requires companies to cap interest rates on student loans at 6 percent while servicemembers are on active duty, in addition to other protections. Since the Navient violation came to light, Senators Murray, Warren, and Blumenthal have pushed the Department of Education to investigate all student loan servicers, not just Navient, to determine how many men and women in uniform might have been overcharged.