Sen. Kamala Harris (D-Calif.), Rep. Suzanne Bonamici (D-Ore.) and 42 members of Congress are pressing the Department of Education to help those overwhelmed by student loans.
The lawmakers jointly penned a letter Friday, July 14 asking the department to strengthen services for people who have defaulted on their financial obligations relating to higher education.
“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,” the lawmakers wrote. “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 letter follows a federal court’s injunction barring the department from assigning newly defaulted student loans to private collection agencies, which gives borrowers options for rectifying their default.
The lawmakers asked Education Secretary Betsy DeVos 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.
“The Department should work with Congress to develop a better system for supporting struggling borrowers and remove barriers to entering affordable repayment plans,” they wrote.
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.
The bipartisan group of lawmakers said that the Education Department 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.
“We encourage 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 letter stated.