Many student loan servicing companies pay their CEOs top-notch salaries and allocate a substantial amount of money to lobby on Capitol Hill, a new article published by The Philadelphia Inquirer revealed.
Student loan servicers collect borrowers’ monthly loan payments and manage other administrative tasks in order to maintain their loans.
The investigation, conducted by reporters Erin Arvedlund and Bob Fernandez, found that loan servicers pay their CEOs and lobbyists who advocate on Capitol Hill handsomely in order to maintain status quo in the industry.
When it comes to the highest salaries among student loan servicer CEOs, Navient’s Jack Remondi received $6.9 million, followed by Nelnet’s Jeffrey Noordhoek, who gets an annual paycheck of $1.8 million. The CEOs of Granite State Management & Resources and Pa. Higher Education Assistance Agency receive an annual package ranging between $300,000 to $800,000.
“The student-loan lobby claims to support students and their families, but the reality is that executives are profiting enormously off of a broken system that leaves so many borrowers crippled in debt,” Seth Frotman, executive director of the Student Borrower Protection Center and former top student loan official at the Consumer Financial Protection Bureau told The Inquirer. “Over the decades, we’ve seen a revolving door of lobbyists peddle policies designed to exploit the pursuit of the American dream.”
Nearly 42 million Americans collectively owe $1.5 trillion in student debt, and 7.2 million individuals are currently in default on those loans. Borrowers of color are significantly affected by such loans.
It’s also no secret that loan servicers spend a large sum of money on Capitol Hill lobbying. According to data compiled by The Inquirer from OpenSecrets.org, nearly a dozen student loan servicers spent $4.4 million lobbying during the 2018 election cycle. The bulk of the contributions came from Navient Corp, SLM Corp, and Ceannate Corp.
According to The Student Loan Report (SLR), a student loan news site, Navient and SLM were the two top student loan companies with the most borrower complaints in 2017. Navient received complaints from individuals in every state, as well as Washington, D.C.
Last week, Senator Bernie Sanders (D-VT) introduced legislation seeking to forgive more than $1.6 trillion in student debt held by 45 million people across the country. It would also make two and four-year public and tribal colleges and universities tuition-free and debt-free.
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