Sen. Elizabeth Warren (D-Mass.) and Rep. Ayanna Pressley (D-Mass.) sent a letter to 10 loan servicers requesting more information about how the companies are communicating with borrowers about receiving President Joe Biden’s student loan relief.
The letter calls on servicers — which include FedLoan Servicing, Great Lakes Educational Loan Services, Inc., EdFinancial, Higher Education Loan Authority of the State of Missouri, Maximus Federal Services, Inc. (Aidvantage), Nelnet, Oklahoma Student Loan Authority, ECSI, Maximus Federal Services, Inc. (Default Resolution Group), and Navient Corporation — to share what steps they’re taking to provide information to borrowers about the plan which would give eligible borrowers $10,000 to $20,000 in federal student loan debt forgiveness.
Warren and Pressley state that servicers “will be critical partners in ensuring that borrowers receive this life-changing relief, both leading up to and during the implementation of these reforms.” They add that servicers have a responsibility to inform borrowers about the debt cancellation, the extension of the student loan payment pause, and other reforms that may impact their loan balances and payments going forward.
“To that end, servicers must ensure that they are appropriately staffed to handle the increased volume of borrowers calling to get information about the administration’s recent announcements, that they are providing accurate information to borrowers, that they have strong systems in place to ensure balances and payments are adjusted accurately, and that borrowers are notified about these changes on a timely basis,” the lawmakers wrote. “Failure to do so would cause grave harm to borrowers.”
The lawmakers noted that prior to Biden’s announcement, Maximus-owned Aidvantage mistakenly notified some borrowers that their payments were due in September, “causing borrowers an extreme deal of confusion and anxiety.”
Additionally, the letter called out Navient for sending an email to borrowers after Biden’s announcement that encouraged them to refinance their loans under the company’s private NaviRefi program, which could eliminate some borrowers’ eligibility to have their debt canceled.
“These incidents underscore the need for servicers to be vigilant about providing borrowers with accurate, timely, and clear information about the status of their loans and expected timelines,” the lawmakers wrote. “They also show that at least one servicer appears to be using dishonest practices to mislead borrowers and placing their ability to benefit from cancellation at risk. This is in addition to an uptick in attempts by scammers exploiting the debt cancellation announcement to ‘separate people from their money, their personal information or both.’”
Warren and Pressley listed 11 questions for the servicers to answer, which include describing how their company is advising borrowers, including those with commercially-held Federal Family Education Loans (FFEL), about Biden’s relief plan, and to provide copies of all material sent to borrowers over the loan relief via mail or email.
Earlier this month, the Department of Education (ED) released more guidance of what loans are eligible for cancellation. ED states that FFEL loans held by ED are eligible, and borrowers with privately-held federal student loans can receive this relief by consolidating their loans into the Direct Loan program.
The lawmakers also sent a separate letter to Navient CEO John Remondi requesting information about the email sent to borrowers about refinancing their loans under the NaviRefi program.
A Navient spokesperson shared the email with NASFAA and pointed to the bottom footnotes of the message which states borrowers may lose benefits associated with their underlying federal and/or private loans if they refinance, such as federal income-driven repayment plans, economic hardship deferment, Public Service Loan Forgiveness, or other deferment and forbearance options. The spokesperson noted that this information is also available on the Navient website.
The email’s footnotes also includes a notice about Biden’s loan relief announcement, which states that refinancing federal student loans with a private lender means the borrower will no longer be able to take advantage of certain benefits, including the pause on payments and interest accrual currently in place through Dec. 31, 2022. The footnotes alert borrowers that refinancing with a private lender would make them ineligible for the debt cancellation announced by ED, the Public Service Loan Forgiveness waiver through Oct. 31, 2022, “or any other relief measures implemented for federal loans to address the COVID-19 crisis.”
“NaviRefi’s promotional emails, website (navirefi.com) and application and approval processes include clear, comprehensive and numerous statements designed to help borrowers understand the terms of private loans,” a Navient spokesperson said in a statement. “During the process of refinancing, we also automatically opt-out any federal loan that has a $0 payment, such as a federal loan currently covered by the CARES Act.”
Warren and Pressley listed five questions for Remondi, including how many people Navient sent marketing emails to regarding refinancing student loans following Biden’s student debt cancellation announcement, and how many of Navient’s borrowers have refinanced their loans or have started to take action to refinance their loans under NaviRefi since the announcement.
Publication Date: 9/14/2022