- Navient CEO Jack Remondi said Biden’s student loan cancellation created “confusion.”
- He said borrowers on FFEL loans still needed further guidance on what steps to take to get relief.
A few weeks after President Joe Biden announcement large student loan forgiveness, the companies that service these loans are still struggling with how to implement the relief.
Late August, Biden said it would forgive up to $20,000 in student debt for federal borrowers earning less than $125,000 a year. Its Department of Education said the relief will be automatic for some, while the majority will have to apply for it by beginning of October. Borrowers and student loan companies still struggle to understand the mechanics of qualifying for and obtaining this relief.
At Barclay’s global financial services conference last week, Navient CEO Jack Remondi expressed concerns about the logistics of Biden’s debt relief and the companies’ lack of clarity at this stage.
“Probably the hardest thing for us right now is what we don’t know,” Remondi said. “We don’t know more about the plan and the schedule than we know about what’s going to happen. This created all sorts of confusion. The volume of calls, for example, increased almost eight times the normal level after the ad, because customers wanted to know the information, and of course we had to say, ‘we don’t know.'”
Navient holds certain loans under the Federal Family Education Loans (FFEL) program, which are private loans that would not automatically qualify for federal debt relief from Biden. So far, the Ministry of Education has informed FFEL borrowers must consolidate their loans into federal direct loans to make them eligible for loan forgiveness, but said it was “assesswhether to make these loans eligible for relief without any further action.
Remondi said he hoped that would eventually be the case because requiring all those borrowers to come together would be “a pretty big undertaking.”
“Probably the most important thing we are looking for, and one we would certainly recommend if this program goes ahead, is to allow borrowers to receive the loan forgiveness they are eligible for where their loans are held. today so that we don’t require people to consolidate and take unnecessary steps that they wouldn’t have to otherwise,” Remondi said.
Initiated has already spoken to an employee of a small student loan company that handles FFEL loans, and she expressed the same sentiment as Remondi – that the lack of guidance from the Department of Education is the source of the confusion.
“I know in the past when the department got behind on consolidation forms, it took months to get them through, and that’s what really worries me,” she said. “Are they going to accept these pardon requests if the consolidation doesn’t happen by December 31? Can they apply in advance? Will they accept someone who had the consolidation request at the advance ?”
Even before Biden’s announcement, companies warned administration that errors could occur during the implementation process by announcing a waiver with very little notice. But the ministry maintains that it has the capacity to do this loan forgiveness effectively, and that once the application forms become real, borrowers should try to apply. as soon as possible to get relief before payments resume next year.