March 03, 2016

Warren Seeks Answers from Education Secretary Nominee About Department’s Flawed Oversight of Student Loan Servicers

Questions Follow Inspector General Report Detailing Faulty and Inaccurate Review of Servicemembers Civil Relief Act Compliance by Student Loan Servicers

Text of Warren letter and “Questions for the Record” available here (PDF)

Washington, DC – United States Senator Elizabeth Warren (D-Mass.) today sent a letter and a series of “Questions for the Record” to Acting Secretary of Education Dr. John King, seeking answers about the Education Department’s (ED’s) flawed oversight of student loan servicers’ compliance with the Servicemembers Civil Relief Act. Dr. King recently was nominated to serve as Education Secretary and his nomination is being considered by the Senate Health, Education, Labor and Pensions (HELP) Committee. 

Earlier this week, ED’s Office of Inspector General (OIG) released a report explaining that the Department’s 2015 review of Navient and other student loan servicers was statistically flawed, inaccurate, and invalid.  Senators Warren, Murray and Blumenthal requested the ED OIG report and released a Warren staff report in August that raised concerns with the methodology of the Department's review and about whether it adequately identified servicemembers who had been overcharged.

“This week’s independent review 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. The thousands of servicemembers who were cheated deserve far better. These findings also 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,” Warren wrote. “If confirmed as the next head of the Department of Education, you will be responsible for ensuring that private companies who contract with the Department to participate in the student loan program follow the law and are held accountable when they cheat borrowers. We need to get to the bottom of how this happened — and who allowed it to happen — to ensure that it does not happen again.”

Today, Warren also joined Senators Murray and Blumenthal in sending a letter to Dr. King calling for corrective actions for the military borrowers who were overcharged on their student loans. In their letter, the senators called on the Department to rescind its methodologically flawed reviews, conduct a full review of student loan services to determine how many servicemembers were eligible for the six percent cap on interest rates but did not receive that benefit, and issue all military borrowers who were overcharged a refund for their money.