February 25, 2014

Senator Warren Calls on Sallie Mae to Disclose Details of Efforts to Assist Struggling Borrowers

Washington, DC - United States Senator Elizabeth Warren today sent a letter to Sallie Mae requesting the company disclose the precise means it uses to help student borrowers avoid default. The letter follows several statements by Sallie Mae about its success keeping student borrowers out of default. In her letter, Senator Warren noted that while there are a number of tools available to help borrowers, â??Not all strategies to reduce default rates result in a path to successful repayment, and some may even leave borrowers deeper in debt.â??

Federal student loan servicers, such as Sallie Mae, can offer different repayment plans to borrowers; however, some plans such as deferment or forbearance may hurt borrowers in the long-term. Income-based repayment plans are the best option for many student borrowers, as they decrease the borrowerâ??s payment and offer loan forgiveness. Senator Warren expressed concern that Sallie Mae has chosen to place students in deferments or forbearances even when an income-based plan would be the best option, and called on the company to release information about the ways it assists struggling borrowers.

â??We have a responsibility to address the $1.2 trillion of student debt that are holding back our economy and threatening the futures of so many young Americans,â?? Senator Warren wrote. â??With about one in five student loan borrowers delinquent on their student debt, the government and the public should be able to look more closely at the role that servicers and lenders play in keeping students on the path to successful repaymentâ?¦ If Sallie Mae has confidence that its efforts at helping students avoid default are truly in the long-term interest of its distressed borrowers, it should be more transparent about the details of those efforts.â??

Full text of Senator Warrenâ??s letter available here