Student loan companies spend millions on lobbying amid extended loan moratorium

(OpenSecrets) Student loan companies spent over $6 million on lobbying in the past year and a half as lawmakers continue trying to mitigate the student debt crisis.

President Joe Biden announced Friday that the government would extend a pause on the student loan moratorium through Jan. 31. Though both the Biden and Trump administrations have changed the moratorium’s end date several times, the president said it would be the final extension.

The Trump administration issued the moratorium, which paused federal student loan payments and suspended debt collection efforts, at the beginning of the pandemic. The policy affects more than 36 million Americans, whose collective debt totals to about $1.3 trillion, the Associated Press reported.

But several of the top companies that manage federal loans spent over $4 million in 2020 and have already spent more than $2.4 million this year in lobbying. These companies profit from securing federal contracts and earning a commission on each loan they service.

Navient Corp, one of the largest student loan companies in the country, spent more than $1.7 million on lobbying efforts in 2020 and has already spent over $970,000 in 2021. The Delaware-based company has also spent more than any other student loan group since 2015.

The student loan corporation lobbied against the Equity in Student Loan Relief Act, the legislation that initially suspended loans and debt collection, in 2020. It also reported lobbying conversations about issues related to COVID-19 loan relief this year.

Navient has been the subject of scrutiny in recent years over misconduct regarding student loan payments. In March, the company lost a years-long lawsuit with the Consumer Financial Protection Bureau, which claimed that Navient caused students to lose hundreds of thousands of dollars by steering them toward higher-cost payment plans that profited the company.

The same year as the CFPB suit, Pennsylvania Attorney General Josh Shapiro sued Navient for “engaging in unfair and deceptive lending and failing to offer proper repayment plans to students.” Navient filed a motion to dismiss the case, but the the United States Court of Appeals for the Third Circuit rejected it last July.

Sallie Mae Corp, a financial institution that services private student loans, also spent big on lobbying in the past year and a half. The company, which launched Navient as a separate entity in 2014, spent nearly $1.4 million on lobbying last year and has already spent $960,000 in 2021.

The company reported lobbying conversations about the Coronavirus Aid, Relief and Security Act, which suspended federal student loan payments, as well as about issues related to federal student loan programs as well as private student loans. Sallie Mae has also been involved in lawsuits accusing the company of misconduct while servicing loans.

NelNet Inc, another company that services federal student loans, also lobbied against extending the student loan moratorium, reporting conversations about the “scope and implementation” of the CARES Act related to student loan relief in both 2020 and 2021. The company spent $230,000 in 2020 and has spent $110,000 so far this year.

Navient, Sallie Mae and NelNet have also spent thousands on campaign contributions. The companies were among the top five contributors from the industry last year, spending a combined total of nearly $400,000 on campaign contributions to both Democrats and Republicans.

But several Democrats, including Senate Majority Leader Chuck Schumer (D-N.Y.), Sen. Elizabeth Warren (D-Mass.) and Rep. Ayanna Pressley (D-Mass.), are using the moratorium to lobby Biden for more changes to student loans. The three politicians issued a statement Friday calling on Biden to use the end of the moratorium as a deadline to forgive much of the student debt in the United States, which reached $1.6 trillion in 2020.

“While this temporary relief is welcome, it doesn’t go far enough. Our broken student loan system continues to exacerbate racial wealth gaps and hold back our entire economy,” the three politicians said in the statement. “Student debt cancellation is one of the most significant actions that President Biden can take right now to build a more just economy and address racial inequity.”

Though Biden has expressed some support for student loan forgiveness, he’s made it clear that he does not intend to pardon it entirely. In February, House and Senate Democrats pushed Biden to forgive up to $50,000 in student debt through executive order, but the president said he’d only excuse up to $10,000, and preferred that Congress draft the legislation.

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