July 19, 2023

Senators Warren, Blumenthal, Brown, Markey, Menendez, Van Hollen Seek Answers from Federal Loan Servicers on Plans to Support Borrowers Ahead of Student Loan Payment Restart

“The restart of tens of millions of borrowers’ student loan payments marks an unprecedented event with a heightened risk of borrower harm.”

Text of Letter (PDF)

Washington, D.C. – United States Senators Elizabeth Warren (D-Mass), Richard Blumenthal (D-Conn.), Sherrod Brown (D-Ohio), Edward Markey (D-Mass.), Bob Menendez (D-N.J.), and Chris Van Hollen (D-Md.) sent letters to the federal loan servicers – Higher Education Loan Authority of the State of Missouri (MOHELA), Nelnet, EdFinancial, and Maximus Federal Services Inc. – requesting information about their plans to support the more than 40 million federal student loan borrowers who will soon resume payments on their student loans. 

Borrowers are set to resume payments starting in October. Over the last three years, a number of servicers have exited the federal student loan program, resulting in borrowers being transferred over to new servicers. This has opened the door to potential mistakes in the transfer process, including incorrect balances, improper claims of delinquency, and revised amortization schedules. 

“Even more alarming is that, according to the Wall Street Journal, more than seven million borrowers have not yet been assigned to a payment plan,” wrote the lawmakers. “Most of these borrowers have graduated or are otherwise no longer enrolled in a school, raising concerns that servicers may have trouble locating or contacting these borrowers ahead of the payment resumption.”

Over the course of the pandemic, Senator Warren and her Senate colleagues wrote to servicers requesting information about steps the companies are taking to ensure a smooth transition into repayments for millions of federal student loan borrowers. In 2021, the lawmakers received disappointing responses with only one servicer out of six indicating that it had conducted multiple rounds of outreach to borrowers.

“Our previous correspondence with student loan servicers indicated that they had had little engagement with borrowers throughout the pandemic and were not prepared to support borrowers once payments resumed,” wrote the lawmakers.

Ahead of the looming deadline and following the Supreme Court’s disappointing decision last month to overturn President Biden’s August 2022 plan to cancel up to $20,000 in student loans, the lawmakers also shared concern over reports that servicers are laying off employees and may be unprepared to handle the large volume of outreach from borrowers.

“It is critical that servicers dedicate sufficient staff to respond to borrowers seeking information about the return to repayment, provide accurate information to borrowers about their payment obligations and options to manage their loan, ensure borrowers are assigned to the appropriate payment plan, and notify borrowers about any changes on a timely basis,” wrote the lawmakers.

In order to better understand the plan these servicers have in place to support borrowers, the lawmakers are asking for answers no later than August 1, 2023.

Senator Warren has been a leader in holding loan servicers accountable and has been an outspoken advocate on student debt relief.

  • In April 2023, Senator Warren led 16 senators in sending a letter to the Chair and Ranking Member of the Senate Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies requesting the committee provide $2.7 billion in Fiscal Year (FY) 2024 to fund the Office of Federal Student Aid
  • In February 2023, Senator Warren released a new report based on her investigation into how efforts by Republican officials and special interests to block the President’s plan to cancel up to $20,000 in federal student loan debt would affect Americans.
  • In October 2022, Senator Warren and Representative Ayanna Pressley (D-Mass.) visited communities across Massachusetts to celebrate the Biden administration’s student debt cancellation plan and help residents sign up for student loan relief. 
  • In October 2022, Senator Warren called on the Department of Education to hold for-profit colleges executives accountable for scamming students out of a quality education and loading them up with student debt.
  • In September 2022, Senator Warren and Representative Pressley sent a letter to federal student loan servicers to inquire about the steps they are taking to ensure borrowers are receiving timely information about President Biden’s debt cancellation plan. 
  • In September 2022, Senator Warren sent a letter to the Department of Justice (DOJ) urging DOJ to issue and implement updated student debt bankruptcy guidance without delay following the Biden-Harris administration’s historic decision to cancel up to $20,000 in student debt for up to 43 million borrowers and overhaul the student loan system.
  • In August 2022, Senator Warren recognized the Department of Education for protecting students and taxpayers by taking action to revoke ACICS status as an accreditor.
  • Senator Warren, along with Senate Democratic Whip Dick Durbin (D-Ill.), Senator Brown and Representatives Pramila Jayapal (D-Wash.) and Mark Takano (D-Calif.), urged Secretary of Education Miguel Cardona, urging the Department of Education (ED) 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 (D-N.Y.) and Representatives Jayapal, Pressley, Ilhan Omar (D-Minn.), 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 Schumer and Representative Pressley released new analysis showing that resuming student loan payments would strip $85 billion every year from the economy.
  • Senator Warren, along with Senators Van Hollen, Blumenthal, and Smith 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 Brown, Blumenthal, Smith, and 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 Brown, Blumenthal, Smith, Van Hollen, Booker, Sanders, Tammy Baldwin (D-Wis.), and Markey sent a letter to the Department of Education urging Secretary Cardona to use his authority to automatically remove all student loan borrowers in default.
  • Senator Warren, along with Senators Van Hollen, Blumenthal, Brown, Smith, 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 Markey and Representative 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 (PHEAA) contract servicing student loans with the Department of Education.
  • In June 24, 2021, Senators 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.
  • 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.
  • In April 2021, 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.
  • In April 2021, 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.
  • In March 2021, Senators Warren and Menendez applauded the passage of their Student Loan Tax Relief Act as part of the American Rescue Plan. 
  • In December 2020, Senator Warren introduced the Consumer Bankruptcy Reform Act and in 2019, co-led the Student Borrower Bankruptcy Relief Act with Senator Durbin to make student loans dischargeable through bankruptcy. 

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