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EDUCATION: Murray Questions Duncan on Sallie Mae Contract

May 06 2014

Dept. of Ed has indicated they will renew contract with Sallie Mae despite allegations that student loan servicer broke laws, cheated servicemembers

Murray: “If it’s found that Sallie Mae violated the law, will you pull the servicing contract?”

Duncan: “We’ll look at every avenue if laws are broken.”

(Washington, D.C.)Today, Tuesday, May 6th, 2014, U.S. Senator Patty (D-WA) chaired a Budget Committee hearing with Secretary of Education, Arne Duncan.  Sen. Murray pushed Sec. Duncan on recent allegations that student loan servicers have been violating the law when it comes to how they treat men and women in uniform who are deployed abroad, and how the Department of Education plans to address the situation. 

“One of my top priorities is protecting servicemembers and veterans.  So I was really troubled by the recent allegations that Sallie Mae violated the Servicemember Civil Relief Act with regard to the student loans of military members,” Senator Murray said at the hearing. “ I understand now that several federal agencies are investigating the accusations. The Department of Education spends millions to contract with Sallie Mae.  The Department has not yet levied any fines against the company, and last fall indicated that it will renew Sallie Mae’s contract this year, despite these allegations. Is that still the plan?”

Transcript of the exchange below (Video of exchange):

Murray: One of my top priorities is protecting servicemembers and veterans.  So I was really troubled by the recent allegations that Sallie Mae violated the Servicemember Civil Relief Act with regard to the student loans of military members.  I understand now that several federal agencies are investigating the accusations. The Department of Education spends millions to contract with Sallie Mae.  The Department has not yet levied any fines against the company, and last fall indicated that it will renew Sallie Mae’s contract this year, despite these allegations. Is that still the plan?

Duncan:  All of us have not just an educational but a moral responsibility to provide our veterans with the best education possible—they have given up so much, they have sacrificed so much-- the least we can do is give them a chance to transition back to civilian life, get the education they need and move on to the workforce. There is an active investigation under way…I’m not at liberty to comment on that at this point.  Just know that we are working with the Department of Justice on that and when that investigation is concluded we will take those findings very, very seriously and act accordingly.

Murray:  And if it’s found that Sallie Mae violated the law, will you pull the servicing contract?

Duncan: We’ll look at every avenue if laws are broken. 

Murray: Is someone looking at the other student loan servicing companies to make sure that this is not happening elsewhere? 

Duncan:  We absolutely have to do that and our Federal Student Aid Office is doing that.

Murray: I will continue to watch that very closely.

Duncan: It’s a really important issue and I appreciate your attention to it.