May 07, 2019

Senator Warren Demands Detailed Plan for Federal Student Loan Program from New Chief of the Federal Student Aid Office

The FSA Chief manages the Department's $1.4 trillion federal student loan program, which has been under new scrutiny following explosive audit of the office's failure to effectively oversee student loan servicing companies

Text of Letter (PDF)

Washington, D.C. - U.S. Senator Elizabeth Warren (D-Mass.), a member of the United States Senate Committee on Health, Education, Labor, and Pensions (HELP Committee), today sent a letter to General Mark Brown, regarding his recent appointment as Chief Operating Officer of the Office of Federal Student Aid (FSA) at the U.S. Department of Education ("the Department"). Brown will be the fourth person to lead FSA since the start of the Trump Administration and will manage the Department's more than $1.4 trillion federal student loan program and over 1,200 federal employees.

In the wake of recent revelations regarding FSA's failed student loan oversight, troubling information about the Department's mismanagement of the Borrower Defense and Public Service Loan Forgiveness programs, and recent announcements of school closures affecting tens of thousands of students nationwide, the senator's 23-page letter provides Brown with the opportunity to explain his vision for managing FSA. Senator Warren specifically requests more information about Brown's plans for holding student loan servicers and contractors accountable; improving customer service for over 43 million student borrowers; ensuring borrower-focused implementation of the existing repayment, discharge, and forgiveness programs; and reducing delinquencies and defaults.

"Based on the massive size of this loan portfolio, FSA is essentially the country's fifth largest bank and the world's largest student loan bank," wrote Senator Warren. "Yet, FSA has repeatedly failed borrowers and taxpayers. You have a great deal of work to do to improve FSA."

Senator Warren has consistently worked to hold FSA accountable to students, borrowers, and taxpayers, and has laid out her own vision for overhauling federal student loan servicing through five fundamentals for student loan servicing reform that would improve customer service, protect student borrowers, strengthen accountability, and ensure data transparency. Her letter requests Brown's plan of action on four major ongoing concerns.

Student Loan Servicer Oversight

One of FSA's primary responsibilities is to oversee dozens of contractors that administer the federal student loan program and act as middlemen between the federal government and student borrowers. A February 2019 audit by the Education Department's Inspector General, however, revealed widespread failures of student loan servicers to meet federal standards put in place to ensure accountability and fairness for student borrowers and taxpayers, and a failure by FSA to hold servicers accountable. The Inspector General's findings represent the culmination of years of failure at FSA. The senator has sent four letters to the Department since 2017 attempting to address these problems. In November 2018, Senator Warren released previously undisclosed evidence of student loan servicer Navient's disturbing record of cheating student borrowers and driving them into debt. In her letter to Brown, she also asserts the need for the FSA Chief to ensure that any future student loan servicing solution reinforces FSA's mandate to students and holds these companies accountable.

Public Service Loan Forgiveness and Temporary Expansion of Public Service Loan Forgiveness

Independent audits and publicly-released Department data have also revealed significant problems with the Department's administration of the Public Service Loan Forgiveness Program (PSLF). FSA has also further mishandled the implementation of the new Temporary Expansion of Public Service Loan Forgiveness program (TEPSLF), which Senator Warren fought to establish, indicating significant problems with the program's administration.

As a part of the senator's work, she joined a letter with her Senate colleagues outlining the Department's failures to properly implement TEPSLF, and requesting that the Department provide Congress with a corrective action plan that includes new outreach initiatives and specific instructions and policies for student loan servicers to assist borrowers in accessing TEPSLF. She further asks Brown to make quick and comprehensive improvements to implementation of the PSLF and TEPSLF programs so that they better serve borrowers in public service.

For-Profit College Closures and Borrower Defense

In addition to strengthening oversight of student loan servicers, Senator Warren calls on FSA to take a more aggressive approach to ensure proper oversight of the institutions receiving Title IV funding. Title IV schools should be fiscally and operationally sound, but many have experienced abrupt school closure announcements, which have disrupted the education of thousands of students, leaving many in limbo with huge student loans and no way to continue their education. In the wake of these problems, Senator Warren asks Brown to improve the processes by which FSA monitors at-risk schools and provide an update on the status of the Student Aid Enforcement Unit and its Borrower Defense unit. In November 2017, the senator released a report documenting the Department's failure to grant debt relief to deserving borrowers, and the most recent reports indicate that over 158,000 borrower defense claims are still pending before the Department.

The Student Debt Crisis

Student loan delinquencies, unlike other forms of debt, are increasing despite the strong economy. Currently, there are 8.6 million borrowers in default on nearly $150 billion in federal student loans, and over one million student borrowers defaulted in the past year alone. Student loan debt is also a particular crisis for borrowers of color. Senator Warren requests more information from Brown regarding his plan for the country as it faces an urgent student debt crisis.

To explain how he will take these actions, and how he plans to bring desperately needed reform to FSA, Senator Warren asks that Brown provide answers to all of her questions in the letter no later than May 28, 2019.

"We have to get this right. The financial lives of millions of Americans depend on it," wrote the senator. "I look forward to working with you to protect and serve students--the real customers of the federal student aid program."

Senator Warren has made strong oversight of the U.S. Education Department a top priority, and she has continued this oversight through DeVos Watch--her initiative to hold Secretary DeVos accountable.