Cordray made overseeing student loans a priority for the bureau, and in early 2017 – two days before Mr Trump took office – agency sues Navient, one of the Ministry of Education’s largest student loan service providers, for mistakes and omissions that Cordray said incorrectly added billions of dollars to borrowers’ accounts.
The trial is ongoing and the six state attorneys general have filed similar cases… Navient spokesman Paul Hartwick called the allegations “unfounded” and said the company helped students navigate a complex student loan program.
Mr Cordrey described the country’s rapidly growing student loan debt, which overshadows all but mortgage debt and its often sloppy way of managing it, as a problem for government intervention. “The domino effect of the burden of student debt and loan servicing problems is holding back the younger generation and slowing down the economy,” wrote Mr. Cordray in his 2020 book The Watchdog.
The Department of Education is the primary lender for Americans who borrow to pay for higher education. It directly owns loans to nearly 43 million people totaling $ 1.4 trillion.
As part of one of the government’s most drastic measures to combat the coronavirus pandemic, the department decided in March 2020 to allow borrowers to stop paying off their federal student loans by temporarily setting the interest rate to zero. This pause will last until September.
Because of this freeze, less than 1 percent of borrowers with federal loans are currently making payments on them. Resuming loan collection will be one of the biggest challenges facing the Ministry of Education this year.
But Mr. Cordrey will inherit many other problems, including: extensive errors and obstacles in the Department of Public Service Loan Forgiveness program, which is designed to forgive debts to teachers, military personnel, nonprofit workers, and others working in the public service.
The department is also struggling with claims of hundreds of thousands of borrowers seeking help through a program that seeks to pay off the debts of people who have been defrauded by schools for violating consumer protection laws.
Susan S. Beachy contributed to the research.