Washington DC – U.S. Senators Ron Wyden and Jeff Merkley said today they have joined seven colleagues in urging student loan servicer Navient to cancel decades-old private student loans pushed onto borrowers attending fraudulent, for-profit colleges.
“We write to urge the Navient Corporation to cancel the decades-old, predatory student loans in its portfolio that are governed by the FTC’s ‘Holder Rule’ and subject to claims and defenses based on well-established school misconduct and predatory lending,” the senators wrote Navient President and Chief Executive Officer David L. Yowan.
The letter comes as Navient plans to transfer its 2.7 million student borrower loan portfolio to the Higher Education Loan Authority of the State of Missouri by the end of the year.
From 2000 to 2007, Navient, formerly called Sallie Mae, engaged in predatory loan practices to ensure a steady supply of borrowers from fraudulent, for-profit colleges. Many of these loans still remain in Navient’s portfolio and are eligible for cancellation due to both the servicer’s misconduct and what’s known as the FTC’s Holder’s Rule. That rule allows borrowers to raise the same claims and defenses against a loan provider that they could raise against the original seller of the good or service.
Navient has already been legally mandated to cancel some of these loans. This year, the servicer set aside $35 million in anticipation of further forced cancellations. While the Department of Education has promised to wipe out more than $18 billion of federal debt from for-profit schools, Navient establishes convoluted pathways to relief for its similar loans.
The Higher Education Loan Authority is ill suited to facilitate the cancellation of these loans, the senators said.
The letter was joined by Senators Richard Blumenthal (D-Conn.); Dick Durbin (D-Ill.); Edward J. Markey (D-Mass.); Bernie Sanders (I-Vt.); Tina Smith (D-Minn.); Elizabeth Warren (D-Mass); and Peter Welch (D-Vt.).
The letter was endorsed by the Student Borrower Protection Center and the Project on Predatory Student Lending.
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