In a 23-page letter to the newly-appointed leader of the Department of Education’s (ED) Office of Federal Student Aid (FSA), Sen. Elizabeth Warren (D-MA) asks General Mark Brown to lay out in writing his plan for the federal agency tasked with administering billions of dollars in financial aid each year.
Specifically, Warren asks Brown for his vision with regard to the federal student loan program and loan servicing, “which has been under scrutiny for years,” she writes. She also questioned ED’s recently-announced plans to reorganize leadership within FSA and “whether this reorganization is in the best interest of federal student aid recipients and borrowers.”
As the chief operating officer, Warren writes, Brown’s actions “can make an enormous difference in the financial lives of millions of Americans.” Warren said that rather than conducting a hearing on the loan program or FSA through the Senate Health, Education, Labor, and Pensions (HELP) Committee on which she serves, or calling on Brown to appear before the committee, she chose to submit her questions in writing and asked for a response by May 28.
The questions cover a range of topics, including a February 2019 Office of Inspector General (OIG) audit of ED’s oversight of loan servicers, whether FSA will rescind its 2018 notice of federal preemption, ED’s 2017 decision to terminate its data-sharing partnership with the Consumer Financial Protection Bureau (CFPB), the Public Service Loan Forgiveness (PSLF) program, oversight of for-profit colleges, and borrower defense to repayment claims.
She also asked about recent reports that ED had hired McKinsey & Co. to assess the federal student loan portfolio, and that ED is "weighing selling all or portions of the debt to private investors,” according to The Wall Street Journal.
“This would be an unprecedented move on the part of FSA,” Warren wrote. “Please provide an update on the status of this proposal, including a justification for why this move would be in the best interests of student loan borrowers.”
Concluding the letter, Warren said that despite the fact that FSA is “essentially the country's fifth largest bank and the world's largest student loan bank,” it has “repeatedly failed borrowers and taxpayers.”
“You have a great deal of work to do to improve FSA,” she wrote. “... You have a responsibility to hold student loan contractors and predatory institutions accountable when they break the rules or mistreat borrowers, to ensure that contractors provide borrowers with consistent and high-quality customer service, and to enforce the rights of borrowers.”
Publication Date: 5/7/2019