December 03, 2021
Warren and Colleagues Press Federal Loan Servicers on Plans to Support Borrowers
Washington, D.C. - United States Senator Elizabeth Warren (D-Mass.), along with Senators Chris Van Hollen (D-Md.), Richard Blumenthal (D-Conn.), and Tina Smith (D-Minn.) sent a letter to four federal loan servicers — Nelnet, Oklahoma Student Loan Authority (OSLA), Higher Education Loan Authority of the State of Missouri (MOHELA), and EdFinancial — requesting updated information on the steps the companies are taking to transition millions of federal student loan borrowers back into repayments once the pause on student loan payments ends on January 31, 2022.
“With the scheduled resumption of payments fast approaching, we are requesting an update on how your company is preparing for this historic transition to repayment while clearing the new higher [Education Department] bar for supporting borrowers,” the senators wrote.
Payments on federal student loans have been on pause since the beginning of the COVID-19 pandemic in March 2020, and are set to resume on February 1, 2022 for 32 million borrowers. Half of these borrowers’ loans will also be transferring to a new loan servicer, an unprecedented event with a heightened risk of borrower harm. At the same time, the Education Department’s Office of Federal Student Aid (FSA) recently announced new contract extensions with higher standards for customer service and borrower support, an overdue step to address a long history of poor performance by the federal loan servicing program.
In July, after inquiries from Senator Warren and colleagues and prior to the extension of the federal student loan payment pause, student loan servicers indicated that neither student loan borrowers nor student loan servicers were prepared for payments to resume. The servicers raised concerns that they needed more to ensure that they have adequate staff and procedures in place to provide borrowers with appropriate support.
To better assess the companies’ readiness for repayment restart, Senator Warren and her colleagues are asking the companies for updated information on how they are communicating with borrowers about the restart date, ensuring that borrowers are in the right repayment plan, and preparing at-risk borrowers for the reactivation of their student loans. The lawmakers are also asking for updates on the companies’ staffing and whether they are prepared to meet the performance targets outlined in their new contracts by the time payments resume.
Senator Warren is one of the nation’s leading voices calling for student debtcancellation to boost our economy, help close the racial wealth gap for borrowers, and put an end to predatory practices that harm and trap borrowers in years of debt.
- Last month, Senator Warren, along with Senators Sherrod Brown (D-Ohio), Richard Blumenthal (D-Conn.), Tina Smith (D-Minn.), and Chris Van Hollen (D-Md.) sent a letter to Maximus, the company that is assuming Navient’s federal student loans servicing contract, questioning its troubling history and seeking assurances that borrowers will receive appropriate services and protections during the transition.
- Senator Warren alongside Senators Van Hollen, Blumenthal, Brown, Smith, Edward J. Markey (D-Mass.), and Robert Menendez (D- NJ.) sent letters to the heads of Pennsylvania Higher Education Assistance Agency, Granite State, and Navient calling on them to correct past errors with borrowers’ accounts and address growing concerns over their preparedness to transfer millions of borrowers to new servicers.
- At a hearing in July 2021, Senator Warren pushed for borrower protections after a major student loan servicing shakeup.
- In July 2021, Senator Warren released a statement regarding the end of the Pennsylvania Higher Education Assistance Agency's (PHEAA) contract servicing student loans with the Department of Education.
- In June 24, 2021, Senator Warren and John Kennedy (R-La.) called on PHEAA CEO to address concerns about false and misleading statements made during a subcommittee hearing on student loans, which was chaired by Senator Warren.
- In May 2021, Senator Warren led her colleagues in sending a letter requesting information about the steps the Department of Education and the Office of Federal Student Aid (FSA) are taking to help transition millions of federal student loan borrowers back into repayment ahead of the scheduled end to the pause on student loan payments and interest in September.
- In April 2021, Senators Warren and Raphael Warnock (D-Ga.) led a group of colleagues in a letter to Education Secretary Miguel Cardona urging the Department of Education to take swift action to automatically remove all federally-held student loan borrowers from default.
- That same month at her first hearing as chair of the Senate Banking, Housing, and Urban Affairs Committee's Subcommittee on Economic Policy, Senator Warren called out PHEAA for its mismanagement of the Public Student Loan Forgiveness Program.
- Senator Warren also questioned Jack Remondi, CEO of Navient, on the company's long history of abusive and misleading behavior towards borrowers and their profiting off the broken student loan system.
- Senator Warren has also been continuing her calls for President Biden to use his existing authority to cancel $50,000 in student debt and highlighted data that she obtained from the Education Department revealing the benefit of student debt cancellation.
- In March 2021, Senators Warren and Bob Menendez (D-N.J.) applauded the passage of their Student Loan Tax Relief Act as part of the American Rescue Plan. The provision makes any student loan forgiveness tax-free, ensuring borrowers whose debt is fully or partially forgiven are not saddled with thousands of dollars in surprise taxes. During her time in the Senate, she has helped return tens of millions of dollars tax-free to students cheated by for-profit colleges.
- She demanded that the Department of Education hold student loan servicer, Great Lakes Education Loan Services, Inc., accountable for CARES Act blunder that likely lowered credit scores for millions of borrowers.
- She has worked with House Majority Whip James E. Clyburn (D-S.C.) to close the racial wealth gap by introducing legislation, the Student Loan Debt Relief Act, which would cancel student loan debt for 42 million Americans.
- She prioritized student debt relief and fought to lower student loan interest rates, introducing the Bank on Students Loan Fairness Act as her first bill in Congress.
- She conducted rigorous oversight of the for-profit college industry and helped secure three-quarters of a billion dollars in debt relief for students who were cheated by predatory for-profit colleges, including 4,500 Massachusetts students and more than 28,000 students across the country.
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