Senate Dems Press Dept. of Ed. on Student Loan Servicers
By Consumers Union on Thursday, July 10th, 2014
It’s no longer news that consumers with student loans are paying high interest rates and struggling to keep up with the financial burdens of going to college in today’s America. But loan servicers – the companies that process payments and administer loans once borrowers are repaying them – are coming under increasing scrutiny for failing to work with borrowers or potentially breaking the law.
That’s why a group of Senate Democrats wrote to the Department of Education yesterday demanding more information about the lucrative servicing contracts the Department has given to Sallie Mae, the largest student loan servicer, as well as other big companies.
This request comes after Senator Warren introduced a bill to help borrowers to refinance their student loans at lower rates. President Barack Obama endorsed the proposal – and so did we! – but it was blocked from being considered on the Senate floor. Meanwhile, despite Sallie Mae’s settlement in May with the DOJ and the FDIC for $97 million dollars for violating servicemembers’ rights, the Department still renewed their contract weeks later.
Sallie Mae recently split into two companies – Sallie Mae, which will keep making private loans, and Navient, which will keep servicing federal student loans. But the pressure is on for “Navient” to show it can do a better job than as a loan servicer. We’ll be watching them closely to hold them accountable.
Do you have student loans from the Department of Education? Has Sallie Mae been your loan servicer since you started repaying your loans? If so, share your story with us.