Elizabeth Warren slams student loan servicer as Democrats call for debt relief – Mother Jones
Senate Democrats on Tuesday pleaded for forgiveness of some student debt and noted That debt relief would boost the pandemic-stricken economy, help close the racial wealth gap, and help families who have been putting off homeowning, raising children, or retiring.
But Sen. Elizabeth Warren (D-Mass.), the chair of the Senate subcommittee that held the hearing on student debt — Warren’s first as chair of the panel — focused her questioning less on the cancellations and more on the companies that processed them Edit Loan. want to quit.
Their primary target was Navient, one of the nation’s largest servicers of government and private student loans, serving the loans of more than 12 million borrowers nationwide. The company’s CEO, John Remondi, was part of a panel of nearly a dozen speakers, ranging from members of Congress to academics, who gathered virtually to discuss a wide range of student debt-related issues, including the proposal for Warren’s championed President Joe Biden forgives up to $50,000 in student loan debt through executive action.
Warren opened her questioning by highlighting the numerous government investigations and lawsuits against Navient, as well as the revelation that Navient overtaxed the federal government with $22.3 million in student loan subsidies that the company recently had to repay.
“Mr. Remondi, if a person who worked at the Department of Education stole $22.3 million, they would be fired,” she said. “Can you explain why your government contracts have not been terminated and why Navient has continued to work with you personally since 2014 rewarded nearly $40 million in compensation even as these scandals mount?” She called on the federal government to end its contracts with Navent — and said Navent should fire its CEO while he listened. (Remondi said, that some of Warren’s claims were untrue, and reiterated that his company’s goal is to help all borrowers.)
Warren later confronted James Steeley, the CEO of the Pennsylvania Higher Education Assistance Agency (PHEAA), one of the largest service providers to the federal government’s embattled public sector loan forgiveness program. She cited multiple lawsuits and Department of Education audits accusing the company of under-considering borrower payments when assessing their eligibility for government loan forgiveness — resulting in 98 percent of applicants for the program was denied enactment. Steeley claimed those results were wrong, but didn’t elaborate on how.
@SenWarren: Mr. Steeley, did that @usedgov Terminated your contract or penalized your company in some way for mismanagement mistakes that prevented teachers and firefighters from getting the debt relief they deserve? pic.twitter.com/EiWQMwyUaN
— AFR (@RealBankReform) April 13, 2021
Both Navient and PHEAA have faced a number of lawsuits regarding their treatment of student borrowers. Warren noted that six states have filed lawsuits against Navient, as has the Consumer Financial Protection Bureau, which alleges that Navient deceived borrowers and coerced them into paying higher repayment amounts than they would otherwise be entitled to. PHEAA recently settled a lawsuit filed by the Massachusetts Attorney General and agreed to pay relief to borrowers in the state.
Sen. Robert Menendez (DN.J.) also cataloged the lawsuits against Navient and asked Remondi how much he was paid over the three years the lawsuits were filed. Remondi’s total compensation during that time totaled more than $20 million — a number that pales in comparison to the billions that Menendez says Navient is accused of overcharging borrowers.
“If I were one of your shareholders, I would be concerned that you were pocketing $20 million in salaries and compensation, but your company could still be responsible for a few billion dollars to American families,” Menendez said. “If I were one of your customers, I would call [Education] secretary [Miguel] Cardona to cancel my student debt immediately.”
Sen. Chris Van Hollen (D-Md.) interviewed PHEAA’s Steeley about the process his company uses to verify borrowers’ eligible payments for government loan forgiveness. Steeley criticized the complexity of the requirements that Congress placed on the program. However, Van Hollen responded that the 98 percent forgiveness rejection rate “is not solely due to complexity,” adding that borrowers did not receive the guidance they should have received from service providers like PHEAA, who administer the loans . PHEAA, he said, “took an admittedly complicated process and made it worse.”