April 15, 2022

ICYMI: Warren, Brown, Durbin Call on CFPB and Department of Education to Investigate Mismanagement of Income-Driven Repayment Program, Urge Relief for Borrowers

ICYMI: Warren, Brown, Durbin Call on CFPB and Department of Education to Investigate Mismanagement of Income-Driven Repayment Program, Urge Relief for Borrowers 

“Of 4.4 million eligible borrowers, recent reports indicate that only 32 borrowers have ever had their student loans canceled through IDR”

Letter to CFPB (PDF) | Letter to ED (PDF)

Washington, D.C. – Today, Senators Elizabeth Warren (D-Mass.), Sherrod Brown (D-Ohio), and Dick Durbin (D-Ill.) sent letters to the Consumer Financial Protection Bureau (CFPB) and the Department of Education (ED), calling on them to review student loan servicers’ reported mismanagement of the income-driven repayment (IDR) program, which has led to significant harm for low-income borrowers. Recent reports show that out of 4.4 million eligible borrowers, only 32 borrowers have ever had their student loans canceled through IDR. The senators are urging the CFPB to investigate reports of student loan servicers’ mismanagement of IDR programs and ED to rectify the harms done to borrowers by adopting an IDR waiver that will help borrowers towards debt relief and cancellation.

“It is obvious that IDR plans, as they currently stand, are not fulfilling their original promise that federal student debt should be affordable and not a lifetime debt sentence, particularly for low-income students. ED has a responsibility to ensure borrowers do not bear the consequences of the failures of IDR implementation and oversight and that IDR delivers on its promise of giving borrowers a light at the end of the tunnel,” wrote the senators in their letter to ED.

The senators’ letter comes after a recent NPR report which found that the IDR program has been severely mismanaged by loan services. While IDR plans to limit borrowers’ monthly bills and discharge the borrower’s debt after 20-25 years of qualifying payments, extremely few borrowers are able to get the loan forgiveness they were promised. 

For decades, student loan servicers mismanaged IDR plans, including by failing to properly count qualifying IDR payments, including $0 payments, and not accurately tracking borrowers’ progress towards cancellation. 48% of IDR borrowers qualify for $0 qualifying payment because they earn less than 150% of the federal poverty line – so the failure to count these $0 payments hits lowest-income borrowers the most. 

Senator Warren, Brown, and Durbin are calling on the CFPB to investigate student loan servicers’ severe mismanagement of the IDR program, and they are calling on ED to adopt an IDR waiver that would retroactively count all months since borrowers entered repayment, including periods of deferment, forbearance, and default, as qualified months toward debt cancellation. 

Senator Warren has led the fight to hold student loan servicers and companies accountable for mismanagement and predatory practices that trap borrowers in years of debt. She has continually called for student debt cancellation to boost the economy and help close the racial wealth gap among borrowers. 

  • Last week, Senator Warren commented on President Biden’s extension of the student loan payment pause.
  • Senator Warren, Senate Majority Leader Charles E. Schumer, Representative Ayanna Pressley (D-Mass.), along with Senators Alex Padilla (D-Calif.), Raphael Warnock (D-Ga.), and Representatives Ilhan Omar (D-Minn.), Pramila Jayapal (D-Wash.), and House Majority Whip James E. Clyburn (D-S.C.) led almost 100 lawmakers in a letter to President Biden, urging the administration to act to extend the pause on federally-held student loan payments and to provide meaningful student debt cancellation.
  • Senator Warren, along with Senate Democratic Whip Dick Durbin (D-Ill.), Senator Sherrod Brown (D-Ohio), and U.S. Representatives Pramila Jaypal and Mark Takano (D-Calif.), urged Secretary of Education Miguel Cardona, urging the Department of Education to swiftly discharge the loans of borrowers defrauded by predatory for-profit colleges and universities, including those operated by Corinthian College. 
  • Senator Warren, along with Senate Majority Leader Charles E. Schumer and Representatives Pramila Jayapal, Ayanna Pressley, Ilhan Omar, 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 and Representative Ayanna Pressley released new analysis showing that resuming student loan payments would strip $85 billion every year from the economy.
  • Senator Warren, along with Senators Chris Van Hollen (D-Md.), Richard Blumenthal (D-Conn.), and Tina 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, Richard Blumenthal, Tina Smith, and Chris Van Hollen 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, Bernard Sanders (I-Vt.), Richard Blumenthal, Tina Smith, Chris Van Hollen, 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 Chris Van Hollen, Richard Blumenthal, Sherrod Brown, Tina Smith, Edward J. Markey, and Robert Menendez (D- N.J.) 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 and Representative Ayanna Pressley, 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 contract servicing student loans with the Department of Education.
  • In June 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 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 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.