July 14, 2017

Harris, Bonamici Call on Education Department to Help Struggling Student Loan Borrowers

WASHINGTON, D.C. – Today, U.S. Senator Kamala D. Harris, Congresswoman Suzanne Bonamici (D-OR), and 42 members of Congress urged the Department of Education to strengthen services for people who have defaulted on their student loans. The letter follows a federal court’s injunction barring the Department of Education from assigning newly defaulted student loans to private collection agencies, which give borrowers options for curing their default. The lawmakers asked the Secretary of Education to clarify what the Department is doing to support borrowers who have defaulted recently, and to explain how it is helping borrowers get out of default.

“We are deeply concerned that the breakdown in the U.S. Department of Education’s contracting process with private collection agencies has left many struggling student loan borrowers in a state of uncertainty, and that the current system of student loan collections is not serving the interests of borrowers or taxpayers,” wrote the lawmakers. “The Department’s contracts with the entities that are supposed to assist defaulted borrowers are in disarray, but the current upheaval provides an opportunity to improve outcomes for defaulted borrowers going forward. The Department should work with Congress to develop a better system for supporting struggling borrowers and remove barriers to entering affordable repayment plans.”

The Department of Education estimates that hundreds of thousands of student loan borrowers who have recently defaulted on their loans are not receiving services to address their financial challenges. The lawmakers urged the Department to work with struggling borrowers affected by the federal court’s injunction and make sure they are able to get out of default.

Additionally, the lawmakers encouraged the Department of Education to revise the financial incentives it provides to collection agencies and to take steps to make sure the Department and its debt collectors are helping borrowers avoid the negative consequences of default and supporting borrowers’ long-term success. The Department of Education has spent billions of dollars on private collection agencies, but many borrowers default more than once, calling into question the value of debt collectors to borrowers and taxpayers.

Bonamici, a leader on the House Education Committee, and Harris led the letter which was signed in the Senate by Patty Murray (D-WA), Elizabeth Warren (D-MA), Al Franken (D-MN), Dick Durbin (D-IL), Tammy Baldwin (D-WI), Kirsten Gillibrand (D-NY), Ed Markey (D-MA), Mazie Hirono (D-HI), Tom Udall (D-NM), Sherrod Brown (D-OH), Maggie Hassan (D-NH), Ron Wyden (D-OR), and Catherine Cortez Masto (D-NV); and in the House by Frederica S. Wilson (D-FL), Mark Takano (D-CA), Raúl Grijalva (D-AZ), Frank Pallone, Jr. (D-NJ), Salud Carbajal (D-CA), Adriano Espaillat (D-NY), Susan A. Davis (D-CA), Dwight Evans (D-PA), Peter DeFazio (D-OR), Eleanor Holmes Norton (D-DC), Jackie Speier (D-CA), Joe Courtney (D-CT), Donald M. Payne, Jr. (D-NJ), Sheila Jackson Lee (D-TX), Nydia Velázquez (D-NY), Danny Davis (D-IL), John Conyers (D-MI), Peter Welch (D-VT), Mark DeSaulnier (D-CA), Jerrold Nadler (D-NY), Donald Norcross (D-NJ), Steve Cohen (D-TN), Darren Soto (D-FL), Colleen Hanabusa (D-HI), Robert Brady (D-PA), Ro Khanna (D-CA), Karen Bass (D-CA), Earl Blumenauer (D-OR), and Emanuel Cleaver (D-MO).

You can read a copy of the letter here