'Severe' student-loan repayment problems are mounting, lawmakers say — and they're pushing for answers
· Business Insider
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- Democratic lawmakers are pushing the Education Department to address student-loan repayment challenges.
- They're following up on a request from state ombudsmen to look into student-loan servicing "failures."
- Those failures included incorrect billing, delays in debt relief, and improper interest accrual.
Student-loan repayment challenges are mounting, and lawmakers want answers.
A group of over 30 Democratic lawmakers, led by Sen. Elizabeth Warren and Rep. Ayanna Pressley, sent a letter to Education Sec. Linda McMahon regarding the host of problems student-loan borrowers have faced as they've navigated President Donald Trump's repayment changes.
Those issues included servicers incorrectly billing borrowers for higher payments than they owed, improperly accruing interest on balances, and delaying the processing of relief through income-driven repayment plans.
The letter, first viewed by Business Insider, followed up on a request from eight state student-loan ombudsmen that called on congressional leaders and the Education Department to address "systemic failures" in the administration of IDR plans and loan forgiveness programs.
The ombudsmen also cited an example of a borrower whose tracker toward student-loan forgiveness displayed payments that did not count.
"This led the borrower to mistakenly believe she was on track for forgiveness, causing her to spend thousands of dollars on payments that ultimately do not count toward forgiveness," they wrote.
The lawmakers called on the Education Department to respond to the ombudsmen's recommendations, which included bolstering the complaint-resolution process and improving loan-forgiveness tracking.
"Failures in federal student loan servicing have repeatedly posed severe and costly problems for American families," the lawmakers wrote.
The Trump administration has maintained that its student-loan changes are intended to simplify a complex repayment system and curb excessive borrowing, and the department has said it has fixed repayment errors as they arose.
Since Trump's student-loan repayment overhaul took effect on July 1, borrowers have reported a range of errors and confusion with their account statuses. Some of those challenges have led to litigation; most recently, the American Federation of Teachers filed a lawsuit against the Education Department over stalled debt relief for borrowers pursuing Public Service Loan Forgiveness.
Still, the lawmakers wrote that the challenges borrowers have faced have existed before Trump's repayment changes took effect. His administration slashed staff at the Education Department and reduced oversight; a Government Accountability Office report found that the department stopped monitoring servicers for accuracy and call quality after staffing reductions.
The lawmakers' push for more borrower protections comes on the heels of a blue wave that swept the midterm elections, with Democrats gaining control of both chambers of Congress. Democratic lawmakers have indicated they plan to bolster oversight of the student-loan industry and push back on the Trump administration's plans to dismantle the Department of Education.
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Read the original article on Business Insider