Warren condemns misleading and ‘outrageous’ behavior of student loan giant Navient
Senator Elizabeth Warren on Tuesday lambasted student loan service companies like Navient for what she called deceptive “traps” set for federal student loan borrowers following President Joe Biden’s recent announcement to cancel up to $20,000 of that debt.
“As families breathe a sigh of relief, the companies that made billions from a broken student loan system are now setting new traps in a brazen, last-ditch effort to try to line their pockets.” , Warren (D-Mass.) told a hearing of the Senate Banking, Housing and Urban Affairs Committee.
In an exchange with Rachel Gittleman, head of financial services outreach for the Consumer Federation of America, Warren detailed that some borrower clients of Navient – which the senator called “one of the biggest and worst loan servicers in the world” – had recently received offers from the company to refinance their federal loans into low-interest loans with NaviRefi, the company’s private lending arm, but disclosed only in the fine print of the statement. agreement that this could result in the disqualification of Biden’s debt cancellation plan.
While noting that it remains unclear which borrowers and how many received these notifications, Warren said that “instead of sending information to borrowers to help them get the cancellation they are entitled to, Navient has pushed borrowers into loans that could, at best, complicate their ability to obtain cancellation.”
Warren then asked Gittleman whether companies like Navient made more or less money if student borrowers who used their services received debt forgiveness.
“The future of Navient’s lending business hinges on its ability to take the most creditworthy people with federal student loans and refinance them into private loans,” Gittleman replied. “Every borrower who is debt-free as a result of President Biden’s action is one less potential client for Navient.”
“More generally,” she continued, “the better deal the federal government offers borrowers with federal student loans, the less ability Navient has to sell its private loans to people.”
Warren said this was “scandalous behavior” on the part of Navient, which is why she asked the company and other student loan servicers in the industry “what steps they are taking to ensure that consumers receive timely and accurate information about their loans and their eligibility for cancellation.”
Earlier this week, Warren joined Rep. Ayanna Pressley (D-Mass.) in a letter to Navient CEO John Remondi asking him to explain reports on the company’s recent conduct and alleged attempts “to defraud student debt relief borrowers by encouraging them to refinance their loans” with NaviRefi.
Both lawmakers called on Remondi to provide answers to a list of key questions on the issue with a detailed and comprehensive response by September 26.
“We are putting the repairers on notice,” Pressley said in a statement Monday. “It is imperative that managers provide borrowers with accurate and up-to-date information about their student loans.”
“Thanks to President Biden’s plan to cancel student debt,” she continued, “millions of people are now eligible for meaningful student debt cancellation and we need to ensure it is effectively administered and felt.” by as many people as possible. Senator Warren and I want answers.”