May 16, 2019

Senators Warren and Brown Lead Colleagues Questioning Student Loan Companies on their Non-Cooperation with Federal and State Regulators

Lawmakers' Letter Reveals that Federal Student Loan Servicing Companies are Using New Education Department Policy to Justify Withholding Information from CFPB, Inhibiting the CFPB's Student Loan Supervision and Enforcement and Placing Borrowers at Risk

Washington, DC -- United States Senator Elizabeth Warren (D-Mass.) and Senate Committee on Banking, Housing, and Urban Affairs Ranking Member Sherrod Brown (D-Ohio) led a group of Senate colleagues, including U.S. Senate Democratic Whip Dick Durbin (D-Ill.), Senator Kirsten Gillibrand (D-N.Y.), and Senator Sheldon Whitehouse (D-R.I.), sending a letter today to the three largest federal student loan servicing companies, Navient, Nelnet, and The Pennsylvania Higher Education Assistance Agency, regarding disturbing news received from the Consumer Financial Protection Bureau (CFPB) about the servicers' refusal to cooperate with the agency, which is responsible for protecting students from predatory student loan companies. After receiving policy guidance from the Education Department, student loan servicers began withholding information from state and federal regulators seeking to enforce consumer protection laws.

The lawmakers released the letter to the student loan companies and a response from CFPB Director Kathy Kraninger to an April 3, 2019 letter from Senator Warren that requested more information on CFPB oversight and the effects of the Education Department's policy. Kraninger's letter confirmed that, since the Education Department issued the policy in December 2017, student loan servicers have refused to provide information to the CFPB due to the Education Department's policy. In addition to their letter, Attorneys General from 20 states and the District of Columbia, including Massachusetts Attorney General Maura Healey, have also raised the same concerns and called for a reversal of the Education Department's policy. Last week, in a letter to General Mark Brown, who was recently appointed as Chief Operating Officer of the Office of Federal Student Aid at the Education Department, Senator Warren asked him if the Education Department would rescind the 2017 policy.

"This is disturbing news. It reveals that the Department, under Secretary DeVos, has removed a key weapon from CFPB's arsenal to fight illegal behavior and mistreatment of borrowers by student loan servicers, and that federal student loan servicers, who are paid by the federal government, are ignoring federal regulators' request for information," wrote the lawmakers. "It also appears to indicate that -- at a time when independent watchdogs have identified major and ongoing compliance problems with the student loan program and the failure of the Department to adequately oversee the program -- servicers have been complicit in these efforts."

The lawmakers' letter demands answers about student loan servicing companies' refusal to comply with CFPB supervision and enforcement requests for information. The letter also asks about evidence that the companies are also refusing to comply with requests from state regulators and law enforcement, including state Attorneys General and state banking regulators. Regulators need access to information to be able to do their jobs, which include protecting student loan borrowers from unfair, abusive, illegal and deceptive practices carried out by student loan companies and enforcing state and federal consumer protection laws that fall outside of the Education Department's authority. No Education Department policy guidance can free student loan companies of their legal responsibility to comply with state or federal consumer protection law. In addition to asking the student loan companies to cooperate with CFPB, the lawmakers are also calling on the student loan companies to provide answers to a series of questions by May 28, 2019, in order to learn more about the instances of obstruction since December 2017.

Senator Warren has been working to hold the federal government accountable for the administration and oversight of student loans since her 2012 election to the Senate.