Murray Statement on Independent Watchdog Report Finding Failures In Department of Education’s Management of Federal Student Loan Program

Washington, D.C. – U.S. Senator Patty Murray (D-WA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, released the following statement on report released by the Department of Education’s independent watchdog, the Office of Inspector General, which found internal failures at the Department to appropriately oversee student loan servicers that receive federal contracts. The report discloses “noncompliance” by all nine federal servicers, and sometimes repeated noncompliance—yet little being done to hold these servicers accountable. Student loan companies are violating consumer protections and leading to mistakes for borrowers, such as incorrectly applying payments to borrowers’ accounts, inappropriately capitalizing loan interest, improperly driving students into forbearance, and failing to give borrowers the opportunity to correctly enroll in income-driven repayment plans.

“At a time when so many people around the country are struggling with the burden of student debt, it is absolutely unacceptable that the Department of Education’s incompetence is leading to even more debt and hassles for borrowers. This report reveals outrageous mismanagement of the federal student loan program and a pattern of failure by student loan companies that receive taxpayer dollars. Borrowers who have placed their trust in the federal government deserve better, and I will continue to hold Secretary DeVos accountable to make sure the Department is doing everything possible to help borrowers and ensure student loan companies are following the law.”

Senator Murray has consistently called on Secretary DeVos to hold student loan companies accountable to the law and to borrowers. In April and June 2017, she led more than 150 Members of Congress in calling for student loan borrower protections to be reinstated after Secretary DeVos rescinded rules to prevent predatory, abusive, and unfair practices in student loan servicing. In September 2017, Senator Murray criticized a move by Secretary DeVos to block the Consumer Financial Protection Bureau from looking into misconduct by student loan companies. In June 2018, she asked Secretary DeVos to answer questions about how student loan servicers were being held accountable. And less than two months ago, in December 2018, Senator Murray demanded answers to how Secretary DeVos plans to ensure student loan companies will comply with consumer protection laws in exchange for massive new federal contracts that are currently being negotiated.

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