Warren, Van Hollen, Blumenthal Call On Department of Education to Deliver Additional Relief to Student Loan Borrowers Cheated by Navient
Navient's Historic $1.85 Billion Settlement for Deceptive and Abusive Practices Is a Major Step, ED Has Responsibility to Provide Relief to All Borrowers Navient Harmed
Washington, D.C. – United States Senators Elizabeth Warren (D-Mass.), Chris Van Hollen (D-Md.), and Richard Blumenthal (D-Conn.) sent a letter to Secretary of Education Miguel Cardona urging him to provide additional relief for student loan borrowers affected by Navient’s decades-long record of deceptive and abusive practices. While the historic $1.85 billion multi-state settlement against Navient provides critical and long overdue relief for borrowers cheated by the company, millions of borrowers are ineligible for student loan relief under the settlement terms, and others may not receive appropriate compensation for the harms they suffered under Navient. The senators called on the U.S. Department of Education (ED) to take additional action to redress all of Navient’s victims, including by building a path toward loan forgiveness for the millions cheated by Navient through creating an income-driven repayment waiver similar to the one the department recently made available to correct the broken Public Service Loan Forgiveness program.
"Given that this settlement will not fully compensate or remedy the harms inflicted by Navient on student borrowers, and in light of ED’s repeated failures to address Navient’s predatory practices, ED has the responsibility to use its tools to make things right for Navient’s victims,” wrote the senators.
Instead of guiding borrowers with appropriate services and protections, Navient engaged in predatory practices including deceptive servicing practices, steering borrowers into costly long-term forbearances, and making subprime loans to borrowers they knew would not be able to repay. Last month, Navient and 39 bipartisan state attorney generals reached a historic $1.85 billion settlement that requires the company to cancel $1.7 billion in delinquent private student loan debts and pay $95 million in restitution.
However, only about 66,000, or less than 1%, of all student loan borrowers serviced by Navient would be eligible for loan forgiveness under the terms of the settlement, leaving millions of borrowers ineligible for any forgiveness. Only about 350,000 borrowers are each eligible for a $260 restitution payment – far from the thousands in additional debt that many borrowers incurred due to Navient’s predatory practices.
The senators asked ED to answer how it plans to take action to provide relief to the millions of borrowers cheated by Navient for the full scope of the financial injury they experienced.
Senator Warren is one of the nation’s leading voices for student loan borrowers, holding companies accountable for predatory practices that harm and trap borrowers in years of debt and leading the call for student debt cancellation to boost our economy and help close the racial wealth gap for borrowers.
- Senator Warren, along with Senate Majority Leader Charles E. Schumer (D-N.Y.) and Representatives Pramila Jayapal (D-Wash.), Ayanna Pressley (D-Mass.), Ilhan Omar (D-Minn.), and Katie Porter (D-Calif.) led more than 80 colleagues in a bicameral letter to the Department of Education calling for it to release the memo outlining the Biden administration’s legal authority to cancel federal student loan debt and immediately cancel up to $50,000 of debt for Federal student loan borrowers.
- Senator Warren, along with Senate Majority Leader Charles E. Schumer (D-N.Y.) and Representative Ayanna Pressley (D-Mass.) released new analysis showing that resuming student loan payments would strip $85 billion every year from the economy.
- Senator Warren, along with Senators Van Hollen (D-Md.), Blumenthal (D-Conn.), and Smith (D-Minn.), sent letters to four federal loan servicers, requesting information on their plans to support borrowers when student loan payments resume.
- 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, along with Senators Cory A. Booker (D-N.J.), Sherrod Brown (D-Ohio), Bernard Sanders (I-Vt.), Richard Blumenthal (D-Conn.), Tina Smith (D-Minn.), Chris Van Hollen (D-Md.), Tammy Baldwin (D-Wis.), and Edward J. Markey (D-Mass.) sent a letter to the Department of Education urging Secretary Cardona to use his authority to automatically remove all student loan borrowers in default.
- Senator Warren, along with 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.
- Senator Warren, along with Senator Edward J. Markey (D-Mass.) and Representative Ayanna Pressley (D-Mass.), released a report that detailed the ongoing failures of the Public Service Loan Forgiveness program for public servants in Massachusetts.
- 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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