October 17, 2019

Senators Warren, Blumenthal to Education Department: Don't Renew Navient's Contract

Lawmakers Urge Education Department Not to Reward Student Loan Servicer's Blatant Disregard for Borrowers, Taxpayers, and the Law

Text of the Letter (PDF)

 Washington, D.C. - United States Senator Elizabeth Warren (D-Mass.), member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and Senator Richard Blumenthal (D-Conn.) sent a letter to Education Secretary Betsy DeVos and Major General Mark Brown, Chief Operating Officer of the Office of Federal Student Aid, urging them not to renew the Office of Federal Student Aid's contract with the student loan servicer Navient Corporation when it expires later this year.

The Education Department (ED) currently maintains a contract with Navient worth approximately $200 million per year, despite the fact that the company has been accused of, or found liable for, ripping off borrowers nearly a dozen times over the past decade. Navient has paid millions in fines for overcharging servicemembers on their student loans, failed to repay over $20 million that it currently owes ED, steered struggling borrowers away from repayment plans based on their income, and failed to inform borrowers of their rights under the law. Newly-disclosed documents from a 2017 Consumer Financial Protection Bureau (CFPB) lawsuit show that top-ranking officials at Navient knew of these practices and did little to stop them.

Senators Warren and Blumenthal write that ED should not renew its contract with Navient, given the corporation's decade-long record of terrible servicing practices aimed at student loan borrowers and the Office of Federal Student Aid's statutory requirement to award contracts only to entities that show "extensive and relevant experience and demonstrated effectiveness"  -  which Navient does not.

Senators Warren and Blumenthal have worked together in the past to hold Navient accountable. In 2015, they joined HELP Ranking Member Patty Murray (D-Wash.) and called on ED's Office of the Inspector General (OIG) to examine ED's review of student loan servicers' compliance with the Servicemmebers Civil Relief Act (SCRA), which provides consumer protections to servicemembers while on active duty. In 2016, they responded to the ED OIG report and raised concerns that ED had not adequately identified servicemembers who had been overcharged. Senator Warren also released a report, prepared by her staff, shedding doubt that ED had used the appropriate methodology.

"In the coming weeks, you will have an important decision to make about whether to renew Navient's ED contract, worth hundreds of millions of dollars, for servicing student loans," the lawmakers wrote to Secretary DeVos and Major General Brown. "We urge you not to reward Navient's blatant disregard for borrowers, taxpayers, and the law. Navient's record-and the newly-released documents that provide important details about company policies and practices, and the extent to which high-level executives, including the company CEO, were aware of these policies and practices-makes it clear that the company has repeatedly ripped off student loan borrowers, failed to meet contractual requirements, and appeared to violate numerous federal and state laws."

Senator Warren is one of the nation's leading voices calling for student debt cancellation and an end to predatory practices that hurt borrowers. She has long fought to hold Navient accountable for its servicing practices.

  • In May 2015, she called on ED to explain why it had not yet completed its investigation into Navient's violations of servicemembers' rights.
  • In August 2015, she released a report identifying numerous problems with ED's review of student loan servicers' compliance with SCRA, following Navient's $100 million fine for violating SCRA.
  • In March 2016, she and Senator Blumenthal again raised concerns about ED's flawed review of student loan servicers' compliance with SCRA.
  • In May 2016, she wrote to ED's Office of Federal Student Aid raising concerns about Naivent's dramatic increase in lobbying expenditures in light of the fact the the company still owed ED over $20 million.
  • In August 2017, Senator Warren led a bill, now law, with Republican Senator Roy Blunt (R-Mo.), Chairman of the Senate Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies, that strengthens performance-based accountability of federal student loan servicers through greater competition and stronger oversight.
  • In November 2017, she raised concerns about Navient's acquisition of Earnest, an education finance company and private loan lender.
  • In November 2018, she released a previously undisclosed audit providing evidence of Navient's record of cheating student borrowers and driving them into debt.
  • In May 2019, she led a group of Senate colleagues sending a letter to the three largest federal student loan servicing companies, including Navient, regarding disturbing news received from the CFPB about the servicers' refusal to cooperate with the agency.

More on her oversight of Secretary DeVos's Education Department can be found here.