April 25, 2022

Warren, Warnock, Colleagues Ask Department of Education for its Plans to Provide a "Fresh Start" to Student Loan Borrowers in Default

In April and November 2021, Senators Called on Biden Administration to Give Relief to Borrowers in Default

Text of Letter (PDF)

Washington, D.C. – United States Senators Elizabeth Warren (D-Mass.), Raphael Warnock (D-Ga.), Cory Booker (D-N.J.), Chris Van Hollen (D-Md.), Richard Blumenthal (D-Conn.), Tammy Baldwin (D-Wis.), Dick Durbin (D-Ill.), and Bernie Sanders (I-Vt.), sent a letter to Secretary of Education Miguel Cardona, asking the Department of Education (ED) for details about its plans to implement its plan to give a “fresh start” to student loan borrowers in default before loan payments resume after August 31, 2022. Their letter follows ED’s recent announcement of the extension of the student loan payment pause through August 2022 and its plan to provide a “fresh start” to borrowers in default by eliminating the impact of delinquency and default and allowing these borrowers to enter repayment in good standing. 

“More than 7 million federal student loan borrowers are currently in default on their federal student loans. A disproportionate number of these borrowers are low income, people of color, first generation college students, veterans, student parents, students with disabilities, and people who did not complete college. Removing these borrowers from default when student loan payments and collections resume means that millions will not be immediately subject to wage garnishment, tax refund withholding, and aggressive collections practices that threaten to undermine their economic security. It also makes these borrowers eligible to enroll in Income-Driven Repayment plans,” wrote the senators. 

Many borrowers in default have been subject to collections for a lengthy amount of time: more than 2.1 million borrowers who were in default or at least 91 days delinquent on their federal student loans at the end of 2019 had been in repayment for 20 years or more, and another 3.4 million borrowers in default or delinquent had been in repayment for between 10 to 20 years. The senators argue that the data suggests that borrowers who remain in default even after ED has garnished their wages, tax returns, Social Security, and other benefits for years may remain in default because they do not have money to be collected, not because they are choosing not to make payments. The Higher Education Act of 1965 gives ED the clear authority to automatically remove those with federally managed loans from default status and to discharge cases of long-term default. The senators also argue that ED could grant borrowers in long-term default further relief by enforcing the Federal Claims Collections Standards, which states that agencies may compromise a debt if “the debtor is unable to pay the full amount due in a reasonable time…or the cost of collecting the debt does not justify the enforced collection of the full amount.”

The senators are calling on ED to answer a set of questions about its plans to implement the “fresh start” program for borrowers in default before the payment pause expires and its plans to provide further relief to borrowers in long-term default by May 5, 2022.

In April 2021, Senators Warren and Warnock led a group of Senate colleagues in a letter urging ED to take swift action to automatically remove all federally-held student loan borrowers from default. In November 2021, Senator Warren led eight of her colleagues in a letter urging Secretary Cardona to use his authority to automatically remove all student loan borrowers in default on federally-held loans from their default status and to develop a policy to discharge debt for borrowers who have been in default for an extended period of time. 

Senator Warren has led the fight for student debt cancellation to boost the economy and help close the racial wealth gap among borrowers. 

  • Senator Warren, Senate Majority Leader Charles E. Schumer (D-N.Y.), Representative Ayanna Pressley (D-Mass.), along with Senators Alex Padilla (D-Calif.), Raphael Warnock, 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, 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, Richard Blumenthal, 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 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.
  • 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.
  • Senator Warren 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.
  • Senator Warrenhas 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.
  • Senator Warren 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.
  • Senator Warren 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.