Elizabeth Warren warns student loan companies that mislead borrowers

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  • Elizabeth Warren told Insider that “the days are gone” when student loan companies could mislead borrowers.
  • Two companies closed their loans, leaving 10 million borrowers unattended.
  • Warren will hold a hearing on Tuesday to discuss how best to facilitate the transition to new service companies.

In just two weeks in July this year, two different student loan companies terminated their services. Good, ”says Massachusetts Senator Elizabeth Warren, who is holding a Senate hearing on Tuesday to discuss how best to protect borrowers when moving to new service companies. She told Insider that other companies should consider this a warning.

“The world has changed for those servicing student loan debt,” Warren said. “They can’t sign a contract, do lousy work, cost borrowers a lot of money and still renew their contracts.”

In the first two weeks of July, about 10 million borrowers were left in limbo after Pennsylvania Higher Education Promotion Agency and Granite Public Administration and Resources said they would not renew their student loan service contracts. PHEAA serves 8.5 million borrowers and GSMR 1.3 million.

Warren, who is holding a hearing on Tuesday with the Senate Economic Policy Subcommittee to discuss how best to protect borrowers as they transition to new services, said it could be a new day for student loans.

“The Department of Education is under new leadership and this is where they have a chance to make a real commitment to students that these loans will be handled in a way that helps them rather than just maximizing the profits of the service companies,” Warren said. …

She told Insider that while the transition will be a challenge for the Department of Education, it will also be an “opportunity,” especially given the suspension of student loan payments and interest, which ends in October.

According to Warren Insider, loan payments of all types are collected properly. From credit card companies to

mortgage lenders
This is done every day and there is no reason why student loan companies cannot do the same.

“Serving student loans is not rocket science,” Warren said.

“What has changed now is that the tiny number of student loan servants who blocked these government contracts even when they did a terrible job now realize that those days are gone. The servants are held accountable, ”she added.

In April, Warren and senior member of the Economic Policy Subcommittee John F. Kennedy invited CEOs of all student loan companies to testify at a hearing on the impact of student debt on borrowers, during which Warren told the CEO of Navient, one of the world’s largest service centers, that he should be fired for misleading borrowers.

She later sent a letter PHEAA CEO James Styles regarding what could have been false testimony before Congress during the April hearing, and invited him to testify again to clarify his comments before the company stopped lending.

Warren is one of the leading lawmakers pushing for President Joe Biden prolong Student loan payments are suspended after it expires in October, requiring either an additional six months of assistance or until the economy returns to pre-pandemic employment levels, whichever is longer.

She told Insider that contrary to the argument that the government lost enough money due to the suspension of payments for more than a year, the hiatus actually “bolstered the economy.”

“In America, the economy is consumer-driven,” she said. “Cutting out tens of millions of people who are deprived of the opportunity to participate in this economy, take money out of their pockets, the money they spend in local stores, and the money they spend to maintain this economy is useless.”

And the continuation of the suspension of payments, she said, would give student loan companies the time it takes to transfer borrowers to new service companies before starting collecting payments again. The companies even told Warren that they were not ready start collecting payments in October, calling the move “unprecedented.”

“The entire student loan industry is in turmoil right now,” Warren said. “We need to get out of this the other way, with less student loan debt, and the remaining debt needs to be better managed. Both will help our students and our economy in the future. ”

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