April 13, 2021

Warren Questions CEO of Navient on Its Long Record of Profiting Off Broken Student Loan System

"The federal government should absolutely fire Navient. And because this happened under your leadership, Navient should fire you." 

During the hearing, Senator Warren also continued her calls for President Biden to use his existing authority to cancel up to $50,000 in student debt.

Video of Hearing Exchange (YouTube)

Washington, D.C. - Today, during her first hearing as chair of the Senate Banking, Housing, and Urban Affairs Committee's Subcommittee on Economic Policy, U.S. Senator Elizabeth Warren (D-Mass.) questioned John 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. 

During the hearing, Senator Warren called for the federal government to end contracts with Navient due to the company's long history of abusive practices. The Senator also continued her calls for President Biden to relieve the burden this broken system has placed on borrowers and use his existing authority to cancel up to $50,000 in student debt.

Transcript: 
U.S. Senate Banking, Housing, and Urban Affairs Committee's Subcommittee on Economic Policy - "The Student Debt Burden and Its Impact on Racial Justice, Borrowers, and the Economy"

Mr. John F. Remondi, President and CEO of Navient.
Tuesday, April 13, 2021

Senator Elizabeth Warren: I want to start by talking about the role that loan servicers play in our student loan system. Borrowers take out loans from the federal government to pay for school and when it's time to collect, the government pays hundreds of millions of dollars to companies called loan servicers to manage the repayment process. Today, we have the CEOs of two of the largest loan services, Navient and PHEAA. Mr. Remondi, your company, Navient, gets paid hundreds of millions of taxpayer dollars to service student loans. So, I want to run through some of the highlights of Navient's record over the last decade. In 2013, the Department of Education's Inspector General found that your company, which was then called Sallie Mae, violated the terms of its contract by failing to report borrower complaints in its debt collection businesses. Is that correct? Mr. Remondi?

John Remondi: Senator, I'd have to go look at the details of that back in that timeframe, but we do -- our job is obviously to comply with the rules and laws and we work very hard to make sure that we help all borrowers successfully manage their loans. 

Senator Warren: Okay, but this is a case where you didn't follow the rules and I'll just enter that into the record. The actual report on that. In fact, in the last seven consecutive Department of Education surveys, Navient has been dead last in borrower satisfaction. So, I guess it's not a surprise if you wanted to hide consumer complaints. Let me ask this question differently. Attorney General Healey, you're one of the nation's leading consumer protection enforcers. You just heard the CEO of Navient say that they comply with the law. Is it your view that Navient does its best to follow the law and generally looks out for the interests of student borrowers?

Massachusetts Attorney General Maura Healey: Thank you, Chair Warren. The answer to that is no. And I think we've spent a lot of focus on forward-thinking in terms of what needs to happen in terms of fixes. I support that as somebody who has done so many investigations and so many lawsuits and heard directly from borrowers who are actual people, not frogs in a pot, but actual people like the Darimir Perez's of the world coming to my office. I will tell you that we have received countless complaints about poor servicing practices. And you know, you can blame Congress, you can blame the Department of Ed, you can blame for-profit schools, you can blame colleges and universities. The burden should not be on the borrowers though, who repeatedly, through our investigations, both with respect to Navient and PHEAA, okay, were shown time and time again to have misled borrowers, to have made misrepresentations to borrowers, to have completely bungled up -- in catastrophic failures -- the way those learns were serviced to the detriment of hundreds of thousands of borrowers. I spoke of the 200,000 borrowers in Massachusetts affected by PHEAA alone. That's just one small story. And finally, with respect to Navient, just to remind folks, you know, the CFPB investigation detailed something that Navient reported, and I find it astounding. Their battle cry was to, quote, "forbear them, forbear them. Make them relinquish the ball. Don't work with them on IDR, but just keep them going in these loans."

And the second thing that Navient also represented in the past, arguing, quote, "there is no expectation that the servicer -- in this instance, Navient -- will act in the interest  of the consumer." That's a problem. 

Senator Warren: Thank you, Attorney General Healey. 

You know, in fact, we're not talking about a few isolated incidents. In fact, Mr. Remondi, in 2016, 29 states investigated Navient for illegally (quote) "paying call center workers based on how quickly they could get struggling student loan borrowers off the phone," instead of actually helping them. You're currently being sued by six different states.

In 2017, a federal audit found that Navient steered borrowers to repayment options that actually made it harder for them to pay back their loans, so that call operators could save time and money. 

Navient even illegally overcharged the government for years to administer student loans to the tune of $22 million. But you've refused to pay it back for eight years. 

So, Mr. Remondi, if a person who worked at the Department of Education stole $22.3 million, they'd be fired. And if they were prosecuted for embezzlement, they could go to jail for 27 years.

But Navient isn't a person, Navient is a contractor. A contractor that never faces real, long-term accountability. 

So can you explain why your government contracts haven't been cancelled and why Navient has continued to reward you personally with nearly $40 million in compensation since 2014, even as these scandals pile up? 

John Remondi: Well, Senator, some of these allegations, these are allegations that are not true, and it's why one of the things that I said --

Senator Warren: I'll say, they're in the public record.

John Remondi: No they're accusations and not necessarily based on fact.

But our goal is to help all borrowers, as I said, successfully manage their loans. That's why my teams and I regularly listen to borrower calls, are constantly making improvements to the way our programs work. We also deploy a very highly trained and caring team of professionals who help borrowers each and every day. The results of this are, is that we are actually, lead the industry in helping borrowers avoid default and, as you know, the devastating consequences that are associated with that. We are very, we perform extremely well in enrolling borrowers in income-driven repayment plans. And we have used this insight that we gather from customers to be very innovative and develop new programs and solutions or processes that help borrowers be successful. Recently, we rolled out an electronic e-sign program for income-driven repayment plans, and this was because we saw from our data and call-listening that customers were having trouble completing the complex enrollment forms that are associated with income-driven repayment -- ten pages long, filled with jargon. And we took that system, developed an alternative, filled out the applications for them so that they would be accurate and complete, and sent them to them for electronic signature. We more than tripled the response rate.

Senator Warren: Mr. Remondi,  I appreciate that, and I understand that you are here to talk about the good things your company has done. But you have been sued repeatedly, and you have been found to owe money that you have refused to pay. And this has happened over and over. And as I said, in the last seven surveys, Navient came in dead last in satisfaction among student loan borrowers. So, I'm glad for you to stand here and paint a general picture, but Navient made more than half a billion dollars last year profiting off a broken system.

The federal government should absolutely fire Navient. And because this happened under your leadership, Navient should fire you.  

But the problem is bigger than that. More than forty million borrowers are trapped in a rigged game. They're crushed by debt. They're hounded by servicers and debt collectors. It is a massive drag on our economy and we need a new approach. Canceling $50K of student loan debt would free millions of people from the traps that Navient and other servicers have laid for them. Thank you. 

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