Democrats Urge Inquiry Into Education Dept. Loan Servicer Review

August 5, 2015

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.”

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