Senator Warren invites CEO of student loan giant Navient to debt burden hearing
Senator Warren has invited the CEO of student loan giant Navient to an upcoming hearing on the debt burden. Yahoo Finance’s Aarthi Swaminathan shares the details.
ZACK GUZMAN: Welcome to Yahoo Finance Live. Student loan giant Navient, which offers federally guaranteed loans to around 5.8 million borrowers, is invited to attend Senate hearing at the invitation of Senator Elizabeth Warren, a vocal critic of lending practices student. And Aarthi Swaminathan of Yahoo Finance is joining us in learning more about this invitation, which was obtained exclusively by her. And Aarthi, what do we know about that when we look at where we are in the student loan crisis?
AARTHI SWAMINATHAN: Yeah, hey, Zack. So it’s really interesting because this is one of the first hearings that Warren is going to chair a specific subcommittee, which focuses on banking and finance. But I thought it was really important to the whole student loan conversation. Because, number one, she’s claimed $ 50,000 in cancellation, but now she’s also trying to investigate why. Why are we here? Why are we at $ 1 trillion, right?
And so this invitation was only extended to Jack Remondi, the CEO of Navient, Navient the largest public company, and who has been, frankly, quite demonized in the press and by the progressives. So, by the way, this whole invitation is voluntary, not mandatory. You can therefore choose not to attend. But Navient has so much to deal with – lawsuits brought by state attorneys general on the basis of alleged deceptive practices. He has a $ 22.3 million fine that he still has not paid to the federal government. He has a lawsuit from the Consumer Financial Protection Bureau.
So there are a lot of things on the table. But the reason this hearing is so important is that all of those regulators, CFPB regulator Warren, have all said over and over again that the reason the crisis got so bad was because of poor service. That’s why it’s going to be really interesting to hear him, if he attends, explain his side of the story, right?
AKIKO FUJITA: Aarthi, we also have the Ministry of Education who will extend the payment [INAUDIBLE] for those federal loans for family education. So what else do we know about how many people this is going to affect?
AARTHI SWAMINATHAN: Yeah, Akiko, it’s … initially it was going to be big, but it affects about a million people. And this specifically affects those with federal private family education loans that are in default. Now that’s a big deal because your wages would have been garnished. Your tax refunds – and this during the pandemic.
So, for this million borrowers, the education department will stop this collection, stop the accrued interest, and also pay back the money, repair the credit. Bureau of– correct credit information. So that’s a really big deal for 1 million people, but, again, there are 6 million people in the category that have paid off loans. It doesn’t really affect them. It only affects those whose loans are in arrears. A small step, but significant enough for the million people involved.
AKIKO FUJITA: Yeah, no doubt about it. Any expansion certainly good, especially if you’re one of those 1 million. Aarthi Swaminathan, thank you very much for bringing this story to us.