June 24, 2021

Warren and Kennedy Call On PHEAA CEO To Address Concerns About False & Misleading Statements Made During Subcommittee Hearing on Student Loans

Bipartisan Request from Economic Policy Subcommittee Leaders Seeks CEO James Steeley's Appearance at New Hearing to Address Inaccurate Testimony  

Education Department Letter on PHEAA | Senators' Letter to PHEAA CEO |

 April 13, 2021 Subcommittee Hearing Transcript

Washington, DC - United States Senators Elizabeth Warren (D-Mass.) and John Kennedy (R-La.) are requesting that James Steeley, the CEO of major student loan servicer, the Pennsylvania Higher Education Assistance Agency (PHEAA), address "what appear to be false and misleading" statements he made during his April 13, 2021 testimony at a hearing on student loan debt before the Senate Banking, Housing and Urban Affairs Committee's Subcommittee on Economic Policy. Sen. Warren is the Chair, and Sen. Kennedy is the Ranking Member of the subcommittee..

"Our hearing was held in part to understand the role of student loan servicers, and the extent to which they bear responsibility for the myriad failures of the student loan program," wrote the Senators in a new letter to PHEAA. "But it appears that you failed to provide accurate information about your company, undermining our Subcommittee's fact-finding role, and potentially misleading committee members and the public. And your testimony, if it was 'knowingly and willfully' false, subjects you to fines and criminal charges."

During the hearing, Mr. Steeley testified that the Education Department has not "penalized in any way" PHEAA for its errors and mismanagement of the Public Service Loan Forgiveness (PSLF) program. The Education Department contracts with PHEAA to administer PSLF, a federal program intended to encourage people to enter public service by forgiving student debt for public servants after ten years.

However, in today's letter to PHEAA's CEO, Senators Warren and Kennedy reference and provide a copy of a May 10, 2021 Department of Education letter, provided to them after the hearing, that contains new information describing nine Education Department reviews conducted since 2016 that revealed problems with PHEAA's implementation of the program, resulting in four corrective action plans and two fines, each of more than $100,000. 

This information, provided by the Education Department to the Senators, appears to contradict Mr. Steeley's denial in his public testimony that Education Department audits dating to 2016 revealed problems with PHEAA's management of the PSLF program and his claim that the Department has not penalized the company for its errors and mismanagement.

Senators Warren and Kennedy asked Mr. Steeley to provide an explanation for his statements no later than July 7, 2021. They also announced that the Economic Policy Subcommittee will hold a follow-up hearing "on the apparent inaccuracies in [Mr. Steeley's] statements and PHEAA's overall record as a student loan servicer," and asked Mr. Steeley to appear in order to explain his statements (date/time of the hearing to be announced).