Elizabeth Warren, others warn of “catastrophic” student loan payments

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  • Sensors Elizabeth Warren, Ed Markey and Tina Smith want to make sure borrowers are ready to resume paying off their student loans.
  • They sent letters to CEOs of student loan companies asking how they were preparing borrowers.
  • Payments are due to resume in October as Democrats continue to call for a $ 50,000 debt write-off.
  • See more stories on the Insider business page

Student loan payments were suspended during the pandemic, which greatly eased the financial situation for borrowers. But the hiatus will be lifted in October, and some Democrats want borrowers to be as prepared as possible.

Senators Elizabeth Warren of Massachusetts, Ed Markey of Massachusetts, and Tina Smith of Minnesota sent letters to the CEOs of all federal student loan services on Monday asking for information on steps they are taking to return borrowers to maturity in October. According to a Pew poll, almost 40% borrowers do not know when their payments will resume, and Press release noted that many credit organizations have laid off employees, which makes it difficult to work with borrowers.

“If troubled borrowers are forced to return to repaying their student loans without any adjustments or support, they could be in default or in distress, facing catastrophic long-term economic consequences that will echo from generation to generation.” – wrote the legislators.

Democrats requested information from seven student loan organizations and wrote to letter that “the staff serving student loans have a terrible track record in helping borrowers cope with financial problems and difficult repayment plans.”

One such service provider is Navient, which Warren has been trying to prosecute for decades. Insider reported in April 2006, when she was still a professor of law at Harvard University, Warren was interviewed for “60 Minutes” and cited student loan abuse by Sally Mae, as Navient was known at the time.

In her first hearing as chairman of the economic policy subcommitteeOn April 13, Warren invited Navient CEO John Remondi to testify, during which she told him that the government should “absolutely” fire Navientand Navient must fire Remondi.

At the time, she told Insider that the government has a “duty” to hold service providers accountable.

“Navient has a long history of deceiving and misleading borrowers, employees and taxpayers,” she said. “It’s time to fire them and other employees who are abusing student borrowers at the expense of taxpayers.”

Education Minister Miguel Cardona said during a Senate hearing last week that he was continuing to negotiate an extension of the pay gap in September, but the Department of Education declined to provide further information on those conversations.

Warren, Smith and Markey are also calling for a $ 50,000 payment in student debt relief, but in the meantime, they want to ensure that borrowers can resume payments in a few months.

“Millions of borrowers have received exemptions from student loan payments and interest for over a year during the COVID-19 pandemic, but now they are at risk of facing extreme financial hardship when their payments resume,” lawmakers wrote.

“We support a $ 50,000 debt write-off for each borrower to ease this burden on our economy, but in the meantime, we are asking for information on how your company is preparing to go to repayment and what steps it is taking to provide adequate support. borrowers “.

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