Source: United States Senator for New Jersey Bob Menendez
WASHIGNTON, D.C. – U.S. Senator Bob Menendez (D-N.J.), a senior member of the Senate Banking Committee, today called on Rohit Chopra, Director of the Consumer Financial Protection Bureau (CFPB) to better monitor student loan servicers in order to prevent future abuses by these large companies. Over the years, student loan servicing companies have been systematically driving borrowers into expensive forbearances instead of the income-based repayment options that may serve them better in the long term.
During the oversight hearing to discuss the Consumer Financial Protection Bureau’s Semi-Annual Report to Congress, Sen. Menendez highlighted the Navient settlement, which put the scope of these practices into perspective.
“The Bureau stated that from January 2010 to March 2015, Navient—the nation’s largest student loan servicer—added up to $4 billion in interest charges to the principal balances of borrowers who were enrolled in multiple, consecutive forbearances, noting that a large portion of these charges could have been avoided had Navient followed the law,” said Sen. Menendez.
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The Senator also pushed the CFPB to look into whether student loan servicing companies were also driving borrowers into deferments, when they could have been placed into an income-based repayment plan, especially when their payment would have been $0 monthly.
Sen. Menendez has long advocated for student loan borrowers and has led the call in Congress for President Biden to cancel up to $50,000 in student loans. The Senator has also called for reform of the Public Service Loan Forgiveness (PSLF) program, which has faced scrutiny for mismanagement since its inception in 2007, with only 1 to 2 percent of PSLF applicants being approved each year. Last year, alongside Sen. Elizabeth Warren (D-Mass.), Sen. Menendez secured inclusion of a provision he authored in the American Rescue Plan to eliminate surprise tax payments on forgiven student debt. This removed a key barrier for President Bien to cancel student debt.
Sen. Menendez also raised his concerns on the recent ramping up of money transfer apps that has affected nearly 18 million Americans. The Senator sent a letter today alongside Sen. Warren to probe the parent company of the transfer platform Zelle on the ongoing failure to address the scams and provide appropriate redress to defrauded consumers.