In the aftermath of an agreement to provide $480 million in financial relief to students wrestling with predatory loans from now-defunct Corinthian colleges, Congresswoman Maxine Waters (D-CA), Ranking Member of the Financial Services Committee, has called for greater clarity surrounding the student loan servicers who are charged with forgiving the debt.
In letters sent Wednesday to Consumer Financial Protection Bureau Director Richard Cordray and David Hawn, President and CEO of Education Credit Management Group (ECMC), which has acquired a majority of the college’s campuses, Waters has urged the release of the list of servicers forgiving Corinthian’s “Genesis” loans under a recent deal struck between the Department of Education and the ECMC. Waters noted that such a disclosure would likely avoid the confusion that may prevent a much-needed quick resolution for many students affected by the predatory financial products. The Congresswoman suggests that publishing this list will go a long way towards aiding the independent monitors’ efforts and is needed to ensure that students receive reimbursements critical to reestablishing their financial security.
The letters are just the latest in a series of actions by Waters to address Corinthian’s predatory lending practices and the Department of Education’s muted response to financial products that have left students without access to the American promise of higher education.
The full text of the letters follow:
Honorable Richard Cordray
Director
Consumer Financial Protection Bureau
1700 G St NW
Washington, DC 20552
Director Cordray,
I commend you on your work securing significant debt relief for the many students who were misled by Corinthian’s predatory Genesis loans and cheated out of thousands of dollars that would have served them as they pursued the American promise of higher education. It is my hope that this represents a second chance for many of these students.
However, as you both well know, the student loan servicing industry, much like the mortgage servicing industry, has often worked as a disservice to its customers. Furthermore, students who are to receive private debt relief were intentionally misled when the debt was incurred, and there is undoubtedly confusion among students and servicers about which debts are to be forgiven.
In order to empower students and ensure servicers provide and record all relief that has been promised, I urge ECMC and the agency to release a list of the servicers who are being instructed to write down debts from the Genesis loan program. Armed with this information, students will be able to identify whether they have received the reimbursements they are due and report any issues.
While I appreciate that a monitor has voluntarily been appointed to oversee most of the new management’s interactions with current and prospective students, I am confident that arming students with this information will aid the monitor in its tasks and also allow students to reclaim control of their finances. Providing access to this information will also allow members of Congress to inform affected constituents.
In the aftermath of the financial crisis, I have seen more than my fair share of consumer settlements, which have dragged on indefinitely and failed to deliver on promised relief. Working together, we can ensure students receive what they deserve and close this embarrassing chapter.
Sincerely,
MAXINE WATERS
Ranking Member
David Hawn
President and CEO
Education Credit Management Corporation
1 Imation Place
Building 2
Oakdale, MN 55128
President Hawn,
I commend you on your work securing significant debt relief for the many students who were misled by Corinthian’s predatory Genesis loans and cheated out of thousands of dollars that would have served them as they pursued the American promise of higher education. It is my hope that this represents a second chance for many of these students.
However, as you both well know, the student loan servicing industry, much like the mortgage servicing industry, has often worked as a disservice to its customers. Furthermore, students who are to receive private debt relief were intentionally misled when the debt was incurred, and there is undoubtedly confusion among students and servicers about which debts are to be forgiven.
In order to empower students and ensure servicers provide and record all relief that has been promised, I urge ECMC and the agency to release a list of the servicers who are being instructed to write down debts from the Genesis loan program. Armed with this information, students will be able to identify whether they have received the reimbursements they are due and report any issues.
While I appreciate that a monitor has voluntarily been appointed to oversee most of the new management’s interactions with current and prospective students, I am confident that arming students with this information will aid the monitor in its tasks and also allow students to reclaim control of their finances. Providing access to this information will also allow members of Congress to inform affected constituents.
In the aftermath of the financial crisis, I have seen more than my fair share of consumer settlements, which have dragged on indefinitely and failed to deliver on promised relief. Working together, we can ensure students receive what they deserve and close this embarrassing chapter.
Sincerely,
MAXINE WATERS
Ranking Member
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