Education News

Senators: Biden should cancel student debt—and fire loan servicers

By Mary Ellen Flannery

Led by Sen. Elizabeth Warren (D-Mass.), who said, “borrowers shouldn’t be left holding the bag because of the failures of [student] loan servicers and bureaucrats,” Democratic Senators on a Senate banking committee this week called on President Biden to immediately cancel $50,000 in student debt for every borrower.

Such cancellation would immediately wipe out the debt of 36 million student loan borrowers, Department of Education data shows. Of them, 3.1 million have been carrying their student debt burden for at least 20 years, said Warren.

Earlier this month, NEA marshalled 17 other unions, representing 10 million teachers, faculty, firefighters, and other public servants, in asking the Biden administration to uphold the promise of the Public Service Loan Forgiveness (PSLF) program through the quick cancellation of student debt for every borrower who has served their community for at least 10 years. The 18 unions also asked for a 90-day review of the program, including an audit of every possibly eligible borrower.

This week, NEA’s director of government relations, Marc Egan, also sent a letter to members of the Senate’s Committee on Economic Policy, Banking, Housing, and Urban Affairs, saying “Cancellation of at least $50,000 in student loan debt will strengthen families’ financial security, help close the racial wealth gap, and bolster our economy due to increased consumer spending.”

“You should be fired.”

During the hearing, Senators heard from policy experts; Massachusetts Attorney General Maura Healey; a New York City school counselor who still owes $35,000, more than 10 years after borrowing to pay for her master’s degree; and the presidents of Navient, the U.S.’s largest student loan company, and of the Pennsylvania Higher Education Assistance Agency (PHEAA), whose subsidiary, FedLoan, manages the federal government’s Public Service Loan Forgiveness (PSLF) program.

Both of these companies rake in millions of dollars in taxpayers’ money annually, noted Warren. Meanwhile, Navient has ranked at the very bottom of borrower satisfaction surveys for seven years in a row, and has been sued by California, Illinois, Massachusetts, New Jersey, Pennsylvania and Illinois for misleading and deceiving student loan borrowers and other violations. It also has illegally overcharged the federal government more than $22 million to administer federal student loans, which it has refused to pay back for eight years, said Warren.

“If a person who worked at the Department of Education stole $22.3 million, they’d be fired. If they were prosecuted for embezzlement, they’d go to jail for 27 years,” Warren told Navient CEO John Remondi, who was personally paid more than $20 million by Navient between 2017 and 2019, pointed out Sen. Bob Menendez (D-NJ).

“The federal government should absolutely fire Navient, and because this happened under your leadership, Navient should fire you,” Warren concluded.

“Borrowers shouldn’t be left holding the bag because of the failures of [student] loan servicers and bureaucrats,” Senator Elizabeth Warren said during a Senate hearing this week.
And, while PHEEA is supposed to be helping teachers and firefighters and other public servants to achieve federal loan forgiveness after 10 years of loan payments, 98 percent of PSLF applicants have been rejected. Multiple investigations have found that PHEEA/FedLoan is undercounting the qualifying payments made by borrowers.

PHEEA’s contract also should be terminated, said Warren.

But getting rid of bad loan companies isn’t enough to help borrowers who have been trapped in a broken system for years and years, Democratic Senators said—and NEA agrees.

“The best way to deliver relief to public servants crushed by student loan debt is to cancel their debt—and not after 10 years of bureaucratic torture and miscounted payments,” said Warren. President Biden has the authority, and should do it now, she said.

“How is it that I have so much debt?”

Senators also heard from Darimir Perez, a New York City school counselor who borrowed to pay for a master’s degree more than 10 years ago, and still owes $35,000. “How is that 10 years later, after working full-time in public education, I still have so much debt?” she asked. “I’m a college graduate and I can’t even afford to send my own kids to college.”

Perez, of course, isn’t alone. Even after decades of paying on their loans, many, many educators have tens of thousands, even hundreds of thousands, of student debt, and their applications for PSLF have gone nowhere.

The student debt crisis is so large in the U.S. that it affects people of all races—Black, white, Hispanic, Asian, Native American and Indegenous—whose children all deserve a chance to pursue their dreams. But it is a particular issue for Black families. For generations, racist policies in banking and housing have made it harder for Black families to own homes and build wealth. Consequently, they have had to borrow more to pay for college.

Additionally, to overcome discrimination in the job market, said Warren, people of color also must get more advanced degrees.

“For students who don’t have the benefit of intergenerational wealth, specifically our Black and brown students, signing on the dotted line for student loans has been the only way to pursue a degree,” said Sen. Ayanna Presley (D-MA). “That was certainly true for me. I know what it’s like to lie awake at night, panicked over student loans and default, despite working 12-hour days.”

“All people who call this nation home deserve the freedom to have a full life, to pursue their unique gifts, and contribute to every sector of our economy,” said Presley, as she called on President Biden to immediately cancel $50,000 in student debt for every borrower.

Email Education Secretary Cardona and tell him to provide relief NOW.

One response to “Senators: Biden should cancel student debt—and fire loan servicers

  1. There are many people like me who have been paying them for many years and whose lenders have sold the loans so often they are not considered Federal loans but private. What relief is there with that situation? It would be greatly appreciated if even a portion of those student loans could be forgiven. I will be moving into retirement still paying for student loans I took out in my 30’s to get an education and have a better life. This not how I imagined I would be spending retirement paying student loans.

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