Dear Commons Community,
While the U.S. Department of Education pursues student borrowers mercilessly, it is in no rush to collect on an unpaid $22 million debt owed by student loan contractor Navient Corp. As reported in The Huffington Post:
“For at least the third time this year, the department has pushed back a deadline for Navient to appeal a 2013 ruling mandating that it repay the federal government about $22 million in alleged overpayments it received in the early 2000s.
The Education Department’s inspector general recommended recouping the funds in 2009, as part of the department’s crackdown on student loan companies that were improperly profiting off a program Congress had killed years earlier. However, it took department officials four years to concur.
At the start of 2015, the deadline for appeal was March 31, Navient’s securities filings show. The latest extension, granted sometime between July 1 and Sept. 30, pushed the deadline back to Nov. 12, meaning Navient can continue to delay payment.
The Education Department pays Navient, which maintains it has done nothing wrong, more than $100 million each year for collecting student loan borrowers’ monthly payments.
The department’s delay in collecting the money from Navient contrasts sharply with its draconian attitude towards struggling borrowers seeking to discharge their debts in bankruptcy. Lawyers are expected to challenge borrowers’ pleas for debt forgiveness if they spend any money on “nonessential” items such as gym memberships or manicures, Deputy Assistant Secretary Lynn Mahaffie told the student loan industry in a July 7 letter.
“It’s remarkable that the Education Department is willing to fight for pocket change when it comes to student loan debtors in bankruptcy, but when it comes to its favored contractors it seems that they have no interest in recouping millions of dollars,” said Chris Hicks, who leads the Debt-Free Future campaign at the advocacy group Jobs With Justice.
The department’s leniency toward Navient comes as Education Secretary Arne Duncan battles accusations that his department is too cozy with its loan contractors. Borrower advocates, government investigators and some Democratic lawmakers, such as Sen. Elizabeth Warren of Massachusetts, have repeatedly criticized Duncan and his department for lax oversight of student loan companies, including Navient. Duncan said last month that he plans to leave office by December.
“The department is merciless in its treatment of individuals when it comes to recovering federal funds. It’s sad to see that they show nothing like that same zeal when it comes to corporate waste, fraud and abuse,” said Barmak Nassirian, director of federal relations and policy analysis at the American Association of State Colleges and Universities.”