- Elizabeth Warren and Ayanna Pressley wrote a letter to Navient about its communication to student loan borrowers.
- They cited an insider report that found companies were sending out private debt refinancing notices.
- This would make federal borrowers ineligible for Biden’s recently announced debt cancellation.
Two Democratic lawmakers fear a major student loan company could jeopardize President Joe Biden’s debt forgiveness for some federal borrowers.
On Monday, Massachusetts Senator Elizabeth Warren and Massachusetts Representative Ayanna Pressley sent a letter – exclusively provided to Insider – to Navient CEO John Remondi, requesting information on the guidance the company is currently giving to student loan borrowers.
After Biden announced up to $20,000 in student loan forgiveness for federal borrowers in late August, Insider reported that some student loan companies, including Navient, were emailing borrowers about their options for refinancing their debt. federal to a private service. This might get them a lower interest rate, but it would make them ineligible for federal debt relief.
Warren and Pressley cited Insider’s report in the letter to Remondi and said “the tactic is unconscionable: just weeks after President Biden announced plans to provide student loan relief to millions of borrowers, Navient is attempting to place them in refinanced loans that are not eligible for relief.”
“If these reports are accurate, they reveal a particularly nefarious and damaging latest tactic by Navient to take advantage of the hardships of borrowers who are finally within reach of obtaining relief from their abusive student loans,” they wrote.
For Insider’s report, a Navient spokesperson pointed Insider to the fine print of the email, which revealed borrowers risk losing federal benefits like Biden’s student loan forgiveness if they refinance. . The spokesperson added that “for a number of years we have contacted potential borrowers about their options for refinancing at lower rates with NaviRefi”, its refinancing tool.
But Warren and Pressley wrote that since the emails come at a time of confusion after Biden’s debt cancellation, they fear the communications could be “predatory” and lead borrowers into financial situations that don’t are not the best option. They are asking Navient to answer the following questions by September 26:
- How many people received Navient’s refinance email after Biden announced debt cancellation?
- How many borrowers have refinanced with private loans since Biden’s announcement?
- How does Navient plan to advise borrowers on Biden’s announcement and other reforms?
- What is Navient’s reach to borrowers with FFEL loans, which are private federal loans?
“Following President Biden’s life-changing action to cancel student debt for millions of Americans, Navient appears to be misleading and misinforming student borrowers about their options – potentially keeping borrowers in debt with private loans while that federal relief is in sight,” Warren told Insider. “Alongside Congresswoman Pressley, I’m working to ensure federal borrowers receive accurate information regarding student debt forgiveness and will continue to monitor throughout the implementation of this policy.”
Both Warren and Pressley have been vocal leaders pushing Biden to offer student debt relief to millions of borrowers. For even longer, Warren has been cracking down on what she calls the predatory behavior of student loan companies like Navient. Last year, Navient announced it would be terminating its contract to service federal loans, and Warren said then that “the federal student loans program would be much better off without them.”
In November 2018, for example, Warren published a Audit providing evidence from Navient’s record of driving students deeper into debt by “guiding student borrowers into forbearance when it was often the worst financial option for them”. At a hearing in April where she invited the CEOs of all student loan companies to testify, Warren told Remondi he should be fired for abuses under his leadership.
Before Biden announced broad relief, student loan companies warned the Department of Education that problems could arise with implementing this plan at such short notice, with only a week left until the resumption payments scheduled for September 1.
Scott Buchanan, executive director of the Student Loan Servicing Alliance — a group that represents federal loan servicing officers — wrote a letter to Education Secretary Miguel Cardona in August saying the department had given businesses ” grossly insufficient notice to reprogram the massive, intertwined systems that handle the loans.” accounts, provide appropriate system testing time, and also develop and implement revised communication plans. »