Wednesday, July 9, 2014
WASHINGTON – U.S. Senators Claire McCaskill, Chairman of the Subcommittee on Financial & Contracting Oversight, and Elizabeth Warren of Massachusetts this week requested information from the Department of Education on its contracts for the origination, disbursement, and servicing of student loans following concerns of inadequate planning, competition, management, and oversight of the loan contracting process. The letter was also signed by Senators Jon Tester of Montana, Tammy Baldwin of Wisconsin, Patty Murray of Washington, Richard Durbin of Illinois, Jack Reed of Rhode Island, Sherrod Brown of Ohio, and Richard Blumenthal of Connecticut.
The Senators expressed concern with the Department of Education’s action to extend existing contracts with several Title IV Additional Servicers (TIVAS) after the administration’s announcement that it would renegotiate the terms of its TIVAS contracts to ensure higher quality service and better outcomes for federal student loan borrowers.
“While we acknowledge the Department’s view that these extensions do not adversely affect its ability to renegotiate these contracts, we remain deeply concerned about the potential for this action to undermine the President’s efforts,” the Senators wrote. “To achieve President Obama’s goals, the Department of Education must use all of its leverage to negotiate strong consumer protections and performance standards that include real consequences for noncompliance… We are also concerned that the Department’s decision to continue its contracting relationship with Navient may have failed to adequately consider current investigations into Sallie Mae/Navient’s loan practices. As you are aware, Navient recently agreed to pay nearly $100 million to settle allegations that it overcharged U.S. servicemembers for their student loans and obtained default judgments against service members in violation of the Servicemembers Civil Relief Act (SCRA).”
The Senators requested the Department of Education provide a comprehensive list of contractors, audits, payments & incentives, as well as reports on performance, planning for future servicing, and the Department of Education’s analyses of the management of TIVAS contracts.
The letter was also signed by Senators Jon Tester of Montana, Tammy Baldwin of Wisconsin, Patty Murray of Washington, Richard Durbin of Illinois, Jack Reed of Rhode Island, Sherrod Brown of Ohio, and Richard Blumenthal of Connecticut.