Student loans
Sen. Elizabeth Warren says that Navient should be fired.
Here’s what you need to know.
Student Loans
Warren (D-MA) chaired an explosive congressional hearing today on student loans. During the hearing, Warren spent considerable time chastising Navient, one of the nation’s largest student loan servicers, and its chief executive, Jack Remondi. Warren didn’t hold back in her criticism of Navient and its business practices that Warren says hurt and mislead student loan borrowers.
“The federal government should fire Navient, and Navient should fire you,” Warren told Remondi.
After the hearing, Warren tweeted this about Navient: “The federal government should absolutely fire Navient for illegally overcharging the government and trapping students in a rigged game. And because this happened under his leadership, Navient should fire Mr. Remondi.”
Sen. Elizabeth Warren on Navient and student loans
Warren said Navient was named last in a survey about student loan borrower satisfaction. Warren also highlighted a string of allegations against Navient, including:
- “a decade-long history of allegations of abusive and misleading practices aimed at student loan borrowers”;
- paying millions in fines for improper marketing of student loans;
- overcharging the federal government $22 million in costs;
- violation of state consumer protection laws; and
- “evidence of wrongdoing” in “numerous other reviews and lawsuits”
Remondi disputed the allegations, said his company is committed to helping student loan borrowers, and Navient follows the law. “These allegations are not true,” Remondi said. “They’re accusations and not necessarily based on facts.”
Student loan forgiveness is a failure because this student loan servicer “can’t count”
Warren continued to criticize not only Navient, but also the chief executive of the Pennsylvania Higher Education Assistance Agency (PHEAA), which also is a major student loan servicer for federal student loans. PHEAA, also known as FedLoan Servicing, manages the Public Service Loan Forgiveness program on behalf of the federal government. Warren says that PHEAA’s “can’t count,” and as a result, 98% of public servants have been rejected for student loan forgiveness.
After the hearing, Warren tweeted: “98% of nurses, teachers, and other public servants who’ve applied for Public Service Loan Forgiveness got rejected — largely because PHEAA can’t count. I told the CEO of PHEAA that [the U.S. Department of Education] should fire them and we should #CancelStudentDebt to fix this utter failure.”
Elizabeth Warren on PHEAA and student loans
Most student loan borrowers who are rejected for public service loan forgiveness either don’t meet the requirements or submitted incomplete or inaccurate paperwork. There have been multiple proposals to fix the Public Service Loan Forgiveness program, ranging from simplified requirements to increased transparency to an easier approval process. A new proposal calls for student loan cancellation for public servants to get student loan forgiveness after 10 years of service, even if they haven’t fulfilled any requirements or met any qualifications.
Student loan cancellation: next steps
What’s the latest on student loan cancellation? Warren is continuing an aggressive push to cancel student loan debt on behalf of student loan borrowers. With Senate Majority Leader Chuck Schumer (D-NY), Warren wants President Joe Biden to enact student loan cancellation of up to $50,000 of student loans for borrowers by executive order. Warren also wants to make student loan repayment simpler, while also ensuring public servants get student loan cancellation. Biden is listening to Warren and her progressive colleagues. While he said he doesn’t support $50,000 of student loan cancellation, he’s keeping his options open as he awaits a legal review on student loan cancellation from the U.S. Department of Education. That review will explore whether the president can enact student loan cancellation unilaterally without further congressional authorization. In the meantime, Biden has already cancelled $2.3 billion of student loans in a targeted manner and may continue to cancel more student loans. For example, Biden cancelled $1 billion of student loans for 72,000 student loan borrowers. He also cancelled another $1.3 billion of student loans for 41,000 borrowers with total and permanent disability. If Biden decides not to pursue wide-scale student loan cancellation by executive order, then Congress likely would need to pass legislation — such as the student loan forgiveness bill that Warren and Schumer proposed — for such student loan forgiveness to become law.
Student loan cancellation is one avenue for student loan repayment. It’s possible that more student loans get cancelled. However, there is no guarantee that your student loans get cancelled or that you will be eligible for student loan forgiveness. As you evaluate strategies for student loan repayment, here are some potential options to consider:
