June 04, 2014

Hearings air concerns about student loan servicing, debt

June 5, 2014 – A Senate Banking subcommittee and the Senate Budget Committee reviewed student loan servicing and student loan debt, with the latter hearing including testimony from CFPB, in hearings on Wednesday.

The Senate Budget Committee hearing addressed student loan debt and the panel heard from CFPB's Student Loan Ombudsman Rohit Chopra, among other witnesses. Committee Chairwoman Patty Murray, D-Wash., discussed the recently introduced legislation from Sen. Elizabeth Warren, D-Mass., the "Bank on Student Emergency Loan Refinancing Act." The bill, currently cosponsored by 35 other Senate Democrats, would allow students to refinance their loans at current, historically low interest rate levels. Both Sens. Ron Johnson, R-Wis., and Kelly Ayotte, R-N.H., questioned the proposed legislation's potential costs for taxpayers.

Also Wednesday, the Senate Banking Subcommittee on Financial Institutions and Consumer Protection held a hearing focusing on the experience that borrowers have with federal student loan servicers. Witnesses include representatives from Denison University, Student Veterans of America and a teacher from Wilson High School, on behalf of the American Federation of Teachers and Washington Teachers Union, among others.

The representative from Student Veterans of America noted during the hearing that student veterans are not given the appropriate information to evaluate the loans they are given. He said that student loan debt prohibits student veterans from having strong financial futures. He also noted that some servicemembers have had their Servicemember's Civil Relief Act rights violated by student loan servicers.