September 14, 2021

Warren and Brown Lead Letter Urging the Department of Education to Continue to Bolster Federal and State Oversight of Student Loan Servicers

Text of Letter (PDF)

Washington, DC - United States Senators Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio), along with Senators Cory Booker (D-N.J.), Chris Van Hollen (D-Md.), Tammy Baldwin (D-Wis.), Richard Blumenthal (D-Conn.), Raphael Warnock (D-Ga.), and Tina Smith (D-Minn.), sent a letter to Department of Education Secretary Miguel Cardona in support of a recent re-interpretation of Department policy that will significantly enhance oversight and accountability of the student loan program and its contractors by ending federal obstruction of state-level efforts to protect student loan borrowers. Their letter calls for the Department to expand this approach to state laws that protect student loan borrowers and contract negotiations with servicers. Their letter is in response to a request for public comment.

Under former Education Secretary Betsy DeVos, the Department took the position that state regulation of loan servicers was broadly preempted by the Federal government’s oversight role. Federal courts repeatedly rejected this position. This policy interfered with state regulators exercising their authority to protect consumers in their states and prevented states from conducting supervisory examinations of loan servicers. It also obstructed state enforcement actions by allowing student loan servicers to withhold from states the documents and data needed to identify misconduct.

“We urge you to apply this strong preemption framework outlined to state laws that provide additional protections to student loan borrowers, such as requiring loan servicers to be licensed or have in place complaint processing protocols,” wrote the senators. “When servicers or other contractors take positions that obstruct Federal or state oversight, they should face consequences under their current contracts and in future allocations and renewals. We strongly urge you to incorporate accountability for abusive and illegal consumer practices and for failure to cooperate with Federal and state regulators into the ongoing management of the student loan program.”

Senator Warren is one of the nation's leading voices calling for student debt cancellation to boost our economy, help close the racial wealth gap for borrowers, and put an end to predatory practices that harm and trap borrowers in years of debt. She has also been a champion for students throughout her years in the Senate, fighting to protect America's students from predatory for-profit colleges and greedy student loan companies and to create more opportunities for young people.

  • 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 with the Department of Education to service student loans.
  • 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 for paused 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 one of the nation's largest student loan servicers, Navient, on the company's long history of abusive and misleading behavior towards borrowers and how the company has made millions of dollars by 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.

###