WASHINGTON, D.C. – Representative Madeleine Dean (PA-04) and Senator Elizabeth Warren (D-MA) led more than 30 lawmakers in a letter urging student loan servicer Navient to reform its flawed process to cancel the private student loans of borrowers who attended fraudulent, for-profit colleges. The lawmakers argued that under the FTC Holder Rule and due to Navient’s misconduct, the company is liable for these predatory loans—and the school misconduct discharge application it has set up to relieve them is opaque and insufficient.
On April 17, 2024, Senator Warren and eight other senators wrote to Navient, urging the servicer to cancel private student loans pushed onto borrowers attending fraudulent, for-profit colleges that the servicer is responsible for. In its response, dated May 8, 2024, Navient claimed that it is “committed to canceling all loans that meet the Holder Rule criteria,” but refused to share basic information about its cancellation process, or how many of its loans are eligible for cancellation, raising concerns that Navient may be improperly denying relief to defrauded borrowers.
“Navient’s evasive response, paired with recent reporting on Navient’s latest version of the misconduct application, suggests that Navient appears to be narrowly defining the criterion for eligibility,” wrote the lawmakers. “Navient should cancel all of the fraudulent debts for borrowers who have been harmed by this misconduct, all of whom Navient is able to identify without an application.”
The lawmakers raised three primary concerns around Navient’s conduct. First, Navient appears to be improperly rejecting applications by narrowly defining and inaccurately determining which borrowers—and which types of loans—are eligible for cancellation under the Holder Rule. Second, Navient is providing insufficient information to borrowers in its denials, making it harder for borrowers to exercise their right to appeal. Third, Navient’s response fails to address the fact that, beyond the FTC’s Holder Rule, the company’s misconduct itself is a basis for cancellation of these loans.
“It is disappointing that Navient has refused to divulge basic information regarding the loans in its portfolio that are eligible for cancellation under the Holder Rule and due to Navient’s misconduct—and disgraceful that you appear to be evading your responsibility to cancel them,” concluded the lawmakers. “As previously requested, Navient should conduct a group discharge for all debts involving fraudulent schools.”
The lawmakers requested that Navient respond to questions about the servicer’s conduct by August 22, 2024.
Read the full letter here.
Rep. Madeleine Dean is a mother, grandmother, attorney, professor, former four-term member of the Pennsylvania House of Representatives, and U.S. Representative for the Fourth District of Pennsylvania.
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