Student loans are front and center tomorrow on Capitol Hill.
Here’s what you need to know.
Sen. Elizabeth Warren (D-MA) will hold a key hearing tomorrow on student loan debt and its impact on racial justice, student loan borrowers and the economy. This is Warren’s first hearing as chair of the Senate Banking, Housing and Urban Affairs Committee’s Subcommittee on Economic Policy. Expect to learn the latest on student loan cancellation. Attendees include, among others:
- Rep. Ayanna Pressley (D-MA): a U.S. congresswoman and student loan forgiveness advocate who also has defaulted on her student loan debt;
- Attorney General Maura Healey (D-MA): a state attorney general who has sued student loan servicers and fought for student loan relief; and
- Navient CEO Jack Remondi: a CEO of one of the nation’s largest student loan companies.
Here’s what to expect at today’s student loans hearing on Capitol Hill:
1. Student loan cancellation — how it affects your student loans and reduces disparities
Rep. Ayanna Pressley (D-MA)
Like Warren, Rep. Ayanna Pressley (D-MA) is a leading advocate for student loan cancellation up to $50,000 of student loans for borrowers. Pressley wants President Joe Biden, rather than Congress, to cancel student loans by executive order. Expect Pressley to discuss:
- the burdens of student loan debt;
- the impact of student loans on the racial wealth gap;
- Biden’s legal authority to cancel student loans unilaterally by executive order; and
- the benefits of student loan forgiveness for student loan borrowers and the economy.
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2. Student loan relief — making student loan repayment easier and holding student loan servicers accountable
Massachusetts Attorney General Maura Healey
Massachusetts Attorney General Maura Healey has been a leading voice in the crusade to hold student loan servicers accountable to student loan borrowers and the public. Healey has sued multiple student loan borrowers, including student loan servicers Navient and PHEAA, allegedly for misleading and overcharging student loan borrowers. Earlier this year, Healey secured student loan relief for 250,000 student loan borrowers. Expect Healey to address:
- a recent settlement with the Pennsylvania Higher Education Assistance Agency (PHEAA) to address its alleged mismanagement of the Public Service Loan Forgiveness (PSLF) program;
- “allegations that PHEAA delayed processing Income-Driven Repayment applications”;
- student loan cancellation for student loan borrowers who were allegedly defrauded by Corinthian Colleges;
- assessment of the impact of student loans on borrowers;
- the ability of current student loan repayment plans such as income-driven repayment plans and the Public Service Loan Forgiveness program to provide student loan borrowers with student loan relief, and
- the ability of the U.S. Department of Education to manage the activities of student loan borrowers and loan servicers.
3. Student loan repayment: how studen
Navient CEO Jack Remondi
Navient CEO Jack Remondi runs one of the largest student loan servicers in the nation. Currently, Navient manages $300 billion of student loans for 12 million student loan borrowers, including for 5.6 million borrowers with federal student loans. Expect Remondi to discuss:
- claims that, in Warren’s words, Navient engaged in: “a decade-long history of allegations of abusive and misleading practices aimed at student loan borrowers”;
- context on the burden of student loans on borrowers and the economy;
- claims that, in Warren’s words, include “problems created for borrowers due to the long record of abusive and misleading behavior by student loan servicers”;
- the ability of student loan borrowers to pay off student loans,
- the role of student loan servicers and how they can help student loan borrowers; and
- the ability of the U.S. Department of Education to manage the activities of student loan borrowers and student loan servicers.
As Warren notes in her invitation letter to Remondi, “Between 2009 and 2019, there were at least 10 incidents where Navient (or its corporate predecessor Sallie Mae) has been accused of or fined for actions that ripped off borrowers. The company paid millions in fines for improper marketing of student loans; a series of Inspector General reports revealed a host of problems, from overcharging the federal government over $20 million in costs…to inform borrowers of their rights…, 29 state Attorneys General alleged that Navient violated state consumer protection laws, and numerous other reviews and lawsuits have identified evidence of wrongdoing.”
What this means for your student loans
Will your student loan get cancelled? No, not immediately following this hearing. However, it’s still possible that your student loans get cancelled for $10,000, $50,000 or another amount. Consider this hearing an information-gathering session from important stakeholders. Following this hearing, Warren and her colleagues in Congress can use this feedback to craft better public policy on student loans. This includes policies on student loan cancellation, student loan repayment, student loan borrower rights, and consumer protection. Warren, Pressley and others in Congress want Biden to cancel up to $50,000 of student loans by executive order. Biden, who is not actively considering $50,000 of student loan cancellation, has asked the Education Department to review his legal authority on student loan cancellation by executive order. While Biden hasn’t enacted wide-scale student loan cancellation, he made moved to cancel $2.3 billion of student loans since becoming president. For example, Biden cancelled $1 billion of student loans for 72,000 student loan borrowers. He also cancelled another $1.3 billion of student loans for 41,000 borrowers with total and permanent disability. A new proposal calls for student loan cancellation for public servants to get student loan forgiveness after 10 years of service, even if they haven’t fulfilled any requirements or met any qualifications.
As you navigate student loan repayment, here are some potential options to consider: