In full transparency, the following is a media release from Sen. Elizabeth Warren’s office. She was elected by voters in the Commonwealth of Massachusetts to serve the state in Washington DC in the US Senate. She is a Democrat. (stock photo)
WASHINGTON DC – Senators Elizabeth Warren (D-Mass.), Sherrod Brown (D-Ohio), and Dick Durbin (D-Ill.) sent letters yesterday, April 15, to the Consumer Financial Protection Bureau (CFPB) and the Department of Education (ED), calling on them to review student loan servicers’ reported mismanagement of the income-driven repayment (IDR) program, which has led to significant harm for low-income borrowers.
Recent reports show that out of 4.4 million eligible borrowers, only 32 borrowers have ever had their student loans canceled through IDR. The senators are urging the CFPB to investigate reports of student loan servicers’ mismanagement of IDR programs and ED to rectify the harms done to borrowers by adopting an IDR waiver that will help borrowers towards debt relief and cancellation.
“It is obvious that IDR plans, as they currently stand, are not fulfilling their original promise that federal student debt should be affordable and not a lifetime debt sentence, particularly for low-income students. ED has a responsibility to ensure borrowers do not bear the consequences of the failures of IDR implementation and oversight and that IDR delivers on its promise of giving borrowers a light at the end of the tunnel,” wrote the senators in their letter to ED.
The senators’ letter comes after a recent NPR report which found that the IDR program has been severely mismanaged by loan services. While IDR plans to limit borrowers’ monthly bills and discharge the borrower’s debt after 20-25 years of qualifying payments, extremely few borrowers are able to get the loan forgiveness they were promised.
For decades, student loan servicers mismanaged IDR plans, including by failing to properly count qualifying IDR payments, including $0 payments, and not accurately tracking borrowers’ progress towards cancellation. 48% of IDR borrowers qualify for $0 qualifying payment because they earn less than 150% of the federal poverty line – so the failure to count these $0 payments hits lowest-income borrowers the most.
Senator Warren, Brown, and Durbin are calling on the CFPB to investigate student loan servicers’ severe mismanagement of the IDR program, and they are calling on ED to adopt an IDR waiver that would retroactively count all months since borrowers entered repayment, including periods of deferment, forbearance, and default, as qualified months toward debt cancellation.