The U.S. Department of Education should largely keep its current model for student loan servicing, but officials should set higher and more consistent standards for the companies they hire to do that work, according to recommendations issued Friday by an interagency task force.
The recommendations will inform the Education Department’s new contract with loan servicers that it expects to sign at some point next year.
The task force, convened by the Obama administration earlier this year as part of a push to improve federal student loan servicing, suggested in a report that the Education Department continue to have multiple contractors who compete among themselves for new loan servicing business from the government. The government should pay contractors extra to help borrowers deemed at a high risk of default and it should standardize some of their activities as they compete among themselves for new accounts, the report says. For example, all contractors should be required to provide borrowers with information about income-based repayment programs.
Corinthian's court-approved liquidation plan will provide $4.3 million for former students, which they will use to press U.S. to grant more sweeping discharges for students of the defunct for-profit chain.
How should parents prepare children for college? In a new book, a former college president takes a look at programs and resources at five different institutions to find out what students need and what parents should do during the first year of college.
Submitted by Paul Fain on August 12, 2015 - 3:00am
Lawrence Lessig is a law professor at Harvard University, a prominent advocate for open-access technology and government reform, and director of the university's Edmond J. Safra Center for Ethics. He's also considering an unusual campaign for the U.S. presidency.
"I will run to be a referendum president if two conditions are met: if we hit our fund-raising target by Labor Day and the leading candidates in the Democratic primary fail to make citizen equality the first priority of their administration," Lessig said on his exploratory committee website. "The key challenge now is making the fund-raising goal. That’s up to you and people like you. If we can raise $1 million for this campaign by Labor Day, then I will run with every ounce of my being."
His candidacy would be of the single-issue variety, and how. Lessig said he would represent a single referendum in his run: to reform the political process. As a candidate and president, he said he would push the U.S. Congress to reduce the influence of money in politics, to eliminate gerrymandering and to prevent roadblocks for people to vote. After that legislation is passed, Lessig said he would resign as president.
"The best presidents are collaborators. They work with Congress as partners over long periods of time. I don’t want to collaborate with these people, and I don’t want to be their partners. I want to force them to act on this issue and then get the hell out of the White House," he said. "This reform needs someone willing to burn as well as build bridges, if need be. I’m running to be that SOB."
Three Senate Democrats on Wednesday called for an independent investigation into the U.S. Department of Education’s review of its loan servicing contractors that largely cleared the companies of allegations they overcharged military service members.
Senator Elizabeth Warren of Massachusetts, Senator Patty Murray of Washington and Senator Richard Blumenthal of Connecticut asked the department’s inspector general to investigate the “adequacy and accuracy of the review process.”
“Unfortunately, the review the department conducted has left us with more questions than answers,” the lawmakers wrote in a letter. “A detailed staff analysis of the [department’s] reviews and the descriptions of their findings raises doubts regarding whether [department] officials adequately reported the results of these reviews to the public.”
The Education Department’s review of the loan servicers began after the Department of Justice accused Navient, formerly known as Sallie Mae, of overcharging members of the military by not capping their interest rate at 6 percent, as is required under the Servicemembers Civil Relief Act. Navient and Sallie Mae paid $97 million to settle the allegations, though they did not admit any wrongdoing.
Education Department officials reviewed some 900 military members' loan files and concluded that service members were overcharged by loan servicers in fewer than 1 percent of those cases.
On Wednesday, Warren’s office also released a report describing flaws in the Education Department’s approach to the review and the calculation of its results.
“We share the commitment of the Senators to our service members, and we welcome any review of our results,” Education Department Press Secretary Dorie Nolt said in an email. “We will review this report and will continue to examine our processes to ensure that our service members receive every benefit they are due.”