Senator Elizabeth Warren calls out this student loan manager for abusive practices amid impending student loan default.
Here’s what you need to know.
In a scathing letter to student loan manager Maximus, Warren (D-MA) wants reassurance that Maximus will protect student loan borrowers when Maximus takes over Navient’s 5.6 million student loan portfolio when Navient is expected to cease manage federal student loans by the end of the year. Here is the content of the letter :
Student loan relief ends soon
Warren is deeply concerned that the Biden administration will not extend student loan relief from the Covid-19 pandemic beyond January 31, 2022. This means student loan borrowers will start repaying student loans again. federal as of February 1, 2022. Student loan payments and student loan interest rates will return to normal after 22 months of temporary student loan forbearance. (Here are 3 ways to get a lower student loan repayment). Warren expressed concern that millions of student loan borrowers would not pay off their student loans if President Joe Biden did not extend student loan relief until the end of next year. Despite its efforts to extend the forbearance on student loans, the US Department of Education has said there will be no extension of this student loan relief. At the same time, Warren has been the leading advocate calling for a large-scale student loan forgiveness for borrowers, including up to $ 50,000 for student loan cancellations. (Here’s how to apply for a limited student loan forgiveness).
Student Loans: “Ending a History of Abuse of Student Loan Services”
As this student loan relief comes to an end, Warren wants “to end a history of student loan abuse.” Warren specifically called out Maximus, including:
- Over the past 8 years, Maximus has received over $ 800 million from the US Department of Education for the management of delinquent student loans; (How to request a student loan discount during the Biden administration)
- Warren says Maximus’ track record may raise concerns that student loan borrowers are getting “poor service” and “abusive practices”;
- Warren alleges that Maximus mismanaged student loan defaults, which led to thousands of student loan borrowers who were eligible for the borrower’s defense to inappropriately repay “having their loan in arrears and their debt. inappropriately seized tax refunds or their wages seized ”;
- Maximus has never managed pre-default student loans, and Warren is concerned about Maximus’ ability to “meet a higher bar of liability”; and
- Maximus has a potential conflict of interest as manager for all currently overdue student loans, and his new role as manager for 5.6 million borrowers currently in student loan repayments.
Navient will no longer manage your federal student loans
Navient, which manages $ 300 billion in student loans for 12 million student loan borrowers, announced last month that Navient would stop handling federal student loans with the US Department of Education. (Here’s what that means for your student loans). Navient announced the surprise move days after Congress avoided a major government shutdown and signed a definitive agreement to transfer its federal student loan service for student loan accounts belonging to the U.S. Department of Education to Maximus. (Here’s why Navient abandoned your student loans). Navient was likely to face increased regulatory oversight from the US Department of Education, Congress, state attorneys general, and the Consumer Financial Protection Bureau (CFPB). Warren wants to ensure that Maximus – who Warren says has a “checkered history” of managing student loans – will now serve $ 449 billion in student loans for 13 million student loan borrowers. Given this increased responsibility, Warren wants to ensure that Maximus is transparent, responsive to borrower complaints, and provides accurate and timely information to student loan borrowers. (If you want student loan forgiveness, follow these 5 steps).
What this means for your student loans
The US Department of Education has announced several major changes to student loans and the cancellation of student loans in recent weeks. For example, the Department of Education will write off $ 2 billion in student loans in a matter of weeks. If Navient is your current federal student loan manager, Maximus will likely become your new federal student loan manager. The US Department of Education will contact you in writing regarding this transition. You have nothing to do. The terms of your student loan, including your interest rate, your student loan repayment plan, and the terms of your student loan, will remain the same. However, you will want to update your automatic payment information after the transition is complete, as you will be making student loan payments to Maximus if Maximus becomes your new student loan manager. That said, you must continue to make student loan payments to Navient until the Department of Education advises you otherwise. It is important to note that this is only for Federal Student Loans and private loans will not be affected.
The end of temporary student loan forbearance means you need to have a student loan repayment game plan. Make sure you understand all of your options now. Here are some popular ways to pay off student loans: