When will the loan servicers stop the nonsense? Why isn’t the Department of Education holding their feet to the fire?
Consider this. The Department of Justice (Justice, not Education), documented that Sallie Mae has been overcharging interest to active duty members of the military since 2005, in violation of the servicemembers Civil Relief Act (SCRA). According to the Federal Deposit Insurance Corporation (FDIC), Sallie Mae also illegally maximized borrower’s late fees and misrepresented how borrowers could avoid late fees. Yikes. The Department of Justice estimated that 60,000 servicemembers were harmed by the illegal activity of Navient (AKA Sallie Mae) and then earlier this year, the Department of Justice announced that the number of military borrowers receiving compensation under a settlement had increased by 30%, to nearly 78,000 borrowers. The Consumer Financial Protection Bureau (CFPB) recently documented ongoing incompetent and illegal loan servicing practices causing unique hardships for military families. The CFPB noted that student loan servicers “still do not appear to understand the elements of the [SCRA]”.
Where has the Department of Education been during all this? First, they renewed Navient’s more than $100 million contract. Ack. Then, they took the matter under review. For a year. The results of ED’s review? ED reported that “the four servicers … complied in the vast majority of cases [with the law].”
Senator Warren called bullsh*t. Because that’s the way she rolls. Warren directed her staff to conduct a detailed analysis of the Department of Education’s review. Oh, snap! According to Warren’s review, the Department of Education’s analysis was “deeply flawed,” “failed to provide a full assessment of whether the student loan servicers were complying with SCRA,” and “failed to examine significant problems with servicemembers’ access to SCRA rate caps,” concluding,”[t]hese problems indicate that ED has failed to effectively assess, act on, or report on potential problems with administration of the SCRA program by student loan servicers.”
Read recommendations for change from the fantastic Deanne Loonin of the National Consumer Law Center –