Committee Chairs to Secretary DeVos: Weak Oversight of Student Loan Industry is Hurting Students and Families
WASHINGTON – Today, Education and Labor Committee Chairman Bobby Scott (VA-03), Financial Services Committee Chairwoman Maxine Waters (CA-43), and Oversight and Reform Committee Chairman Elijah Cummings (MD-07) sent a letter to Secretary of Education Betsy DeVos expressing deep concern over the Education Department’s failure to protect students and families from student loan companies.
The letter addresses recent reports that the Department is shielding student loan servicing companies from state law enforcement and undermining the Consumer Financial Protection Bureau’s (CFPB) oversight of these companies. In March 2019, an independent watchdog found that the Department failed to establish policies to properly conduct oversight of student loan servicing companies.
“As Chairs of Committees with oversight responsibilities over the student loan industry, we are very concerned by reports that under your leadership, the Department of Education has failed to adequately oversee student loan servicers,” the chairs wrote. “Reports indicate that improper practices by these servicers—including inaccurate determination of monthly payments, forbearance steering, and other practices—directly impact millions of Americans and have ripple effects on their families, communities, and the economy as a whole.”
The chairs also raise concerns about the Department’s record of taking extraordinary steps to obstruct federal and state investigations into student loan servicers, while also blocking congressional inquiries into the Department’s policies and practices.
“The Department now appears to have both a formal and informal policy of withholding information from law enforcement, obstructing any investigations into student loan servicers,” the chairs wrote.
The chairs also sent a letter to CFPB Director Kathleen Kraninger requesting information about CFPB’s efforts to protect students. Former Student Loan Ombudsman Seth Frotman argued in his August 2018 resignation letter that CFPB leadership “has abandoned the very consumers it is tasked by Congress with protecting.”
In addition, the chairs sent letters today to federally contracted loan servicers seeking information about their operations, including any strategies or policies that push students into more expensive repayment options.
The full text of the letter to the Education Department here.
The full text of the letter to the CFPB is available here.
The full text of the letter to Navient is available here.
The full text of the letter to Nelnet is available here.
The full text of the letter to Pennsylvania Higher Education Assistance Agency is available here.