Why Elizabeth Warren wants to fire student loan manager Navient
- Since 2013, Senator Elizabeth Warren of Massachusetts has accused Navient of deceptive practices.
- Navient says Warren’s claims are false; she says the government should fire Navient, who should fire its CEO.
- She told Insider it was “over time” to fire Navient and other student loan officers.
- See more stories on the Insider business page.
As calls mount for President Joe Biden to write off $ 50,000 in student debt per person, lawmakers are also monitoring student loan managers, who process loan payments and collections. The problem is, they have been accused of not providing borrowers with all the necessary information.
The big player in student loans is Navient, who is not only the largest manager of student loans in the United States, but also the processor of much of the federally guaranteed student loans, and after the Democrats took Senate control in January, Navient faces a new chairman of the Senate Subcommittee on Economic Policy in the form of Elizabeth Warren.
Warren has had Navient and other student loan managers in his sights for over a decade. All the way back in 2006, when she was still a Harvard law professor, Warren was interviewed on “60 Minutes” and cited Sallie Mae, as Navient was once known, for her abuse of the student loan system. The following year, Warren wrote a column for the Democracy Journal arguing for the creation of a Financial Products Safety Commission that would include protection against deceptively marketed student loans.
During his first hearing as chair of the subcommittee on April 13, Warren invited Navient CEO John Remondi to testify, alongside 10 other witnesses.
Warren said in his letter to Remondi inviting him to testify that Navient has a “ten-year history” of abusive allegations. She told him at the hearing that the government should “absolutely” fire Navient and Navient should fire Remondi. She took it a step further in her comments to Insider.
“The federal government has an obligation to make sure the student loan service works for student borrowers and taxpayers – not big business,” Warren told Insider. “Navient has decades of experience cheating and misleading borrowers, service members and taxpayers. It is high time to fire them and other agents who abuse student borrowers at taxpayer expense. . “
Navient declined to comment on Warren’s call for Remondi to be fired, but pointed out to Insider a link to all of Navient’s responses to Warren’s accusations, calling them “false and misleading.”
Here are the steps Warren has taken to empower Navient since 2013:
Sallie Mae agreed to a multi-million dollar settlement with the New York attorney general’s office in 2007 to resolve claims related to the improper marketing of student loans.
In September 2013, shortly after entering the Senate, Warren sent a letter to the Treasury and Education Departments requesting information about their relationship with Sallie Mae despite “Sallie Mae’s tendency to break the rules and ignore its contractual obligations ”.
Warren cited the 2013 Education Department Inspector General’s finding that Sallie Mae violated contract terms by failing to report verbal complaints received from federal student loan borrowers.
In February 2014, Warren sent a letter to Remondi requesting specific information on how Sallie Mae helped borrowers avoid student loan default, and in March 2014 Warren interviewed James Runcie, Managing Director Department of Education Student Aid, on the Department’s decision to renew Sallie Mae’s contract. despite ongoing state and federal investigations. Warren’s office told Insider that Runcie’s response was “essentially Navient was too big to fail.”
In May 2014, the government fined Navient $ 97 million for violating the Military Civilian Relief Act by illegally imposing high interest rates and late fees on active duty members on active duty. student loans. In August 2015, Warren released a report identifying issues with the Department of Education’s review of student loan managers’ compliance with SCRA.
In May 2016, Warren wrote to the Federal Office of Student Aid expressing concern over Navient’s increased lobbying spending as Navient owed the Department of Education more than $ 20 million.
And in April 2017, Warren called Education Secretary Betsy DeVos for giving Navient a “big kiss” in rescinding Obama-era guidelines that made it harder for agents with a history of deceitful students to secure future contracts on duty.
In November 2018, Warren published an audit providing proof of Navient’s track record that led students to take on more debt by “pushing student borrowers to abstain when it was often the worst financial option for them.”
In October 2019, Warren urged the Department of Education not to renew Navient’s contract, and in January 2020, she asked DeVos to recover the $ 22.3 million Navient owed the department, which ended. to be collected in February 2021.
Most recently, Remondi testified at Warren’s hearing where she told him he should be fired, and Remondi replied, “These allegations are not true.” He added: “These are accusations and not necessarily based on facts.”
Navient has not admitted any wrongdoing and investigations are still ongoing.