6 million student-loan borrowers are 'far better off' after yet another major company announced it will shut down its services, Elizabeth Warren says

6 million student-loan debtors are ‘much better off’ after one more main firm introduced it would shut down its providers, Elizabeth Warren says

Elizabeth Warren

Massachusetts Senator Elizabeth Warren. Drew Angerer/Getty Images

  • Navient, one of many largest student-loan firms, unveiled plans to finish its federal loan providers.

  • Elizabeth Warren mentioned its exit will make the federal student-loan trade “far better off.”

  • She cited many years of abuses by the corporate, together with pushing debtors into deeper debt.

  • See extra tales on Insider’s enterprise web page.

The student-loan trade on Tuesday obtained one more main shake-up when Navient turned the third firm to announce its plans to finish its federal student-loan program amid a regulatory crackdown during the last yr.

Massachusetts Senator Elizabeth Warren had one message for the corporate: good riddance.

“Navient has spent decades misleading, cheating, and abusing student borrowers,” Warren informed Insider in a press release. “The Federal student loan program will be far better off without them.”

Navient, which collects the federal student debt of six million debtors, mentioned in a press launch that it’s working with the Education Department to approve the transition of these debtors to a different student-loan firm, Maximus.

The announcement follows the Pennsylvania Higher Education Assistance Agency (PHEAA) and Granite State Management and Resources asserting in June they are going to be ending their servicing contracts this yr. With Navient following their lead, near 16 million debtors might be paying their student debt to new firms as soon as the fee pause lifts in February.

Navient CEO Jack Remondi mentioned in a press release that “Navient is pleased to work with the Department of Education and Maximus to provide a smooth transition to borrowers and Navient employees as we continue our focus on areas outside of government student loan servicing.”

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Warren, who has held each PHEAA and Navient in her sight for many years, has been clear that their plans to close down is an effective factor for debtors. She mentioned in June that the 8.5 million debtors serviced by PHEAA may “breathe a sigh of relief” since they’d now not must cope with the corporate, and Warren informed Insider in a July interview that “the days are over” when student-loan firms may do “a terrible job.”

“The world has changed for student-loan-debt servicers,” Warren mentioned. “They can’t sign a contract, do a lousy job, cost borrowers tons of money, and still get their contracts renewed.”

Warren has been preventing to carry Navient accountable since even earlier than she was elected to the Senate. Insider reported in April on the excellent historical past Warren has with Navient, beginning in 2006 when she was interviewed on “60 Minutes” and cited Sallie Mae, as Navient was previously recognized, for its abuses of the student-loan system.

Since then, she has repeatedly known as out the corporate for illegal practices with debtors, like in November 2018, when Warren launched an audit offering proof of Navient’s file of inflicting students to enter deeper student debt by “steering student borrowers into forbearance when that was often the worst financial option for them.”

And most notably, throughout an April listening to the place she invited the CEOs of all of the student-loan firms to testify, she informed Navient’s CEO, John Remondi, that he needs to be fired for the abuses that occurred beneath his management.

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Richard Cordray, head of the Federal Student Aid (FSA) workplace, mentioned throughout remarks at a convention earlier this month that student-loan firms are selecting to close down moderately than face extra accountability. To make certain, he didn’t touch upon particular firms however famous that “not everybody was thrilled” together with his plans to strengthen oversight of the trade.

Warren informed Insider that although the three firms are ending their student-loan providers, she is going to “continue to fight for greater accountability and better service for borrowers during and after the upcoming transitions.”

“Ultimately, the student loan system is broken,” Warren mentioned. “The only way to guarantee that borrowers do not face the same predatory behavior from Navient’s replacement is to cancel student debt, so that no borrower’s future is held hostage by corporations profiting off their financial distress.”

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