Student loan companies have spent more than $ 6 million on lobbying in the past year and a half as lawmakers continue to try to ease the student debt crisis.
President Joe Biden announced on Friday that the government would extend a hiatus on the moratorium on student loans until January 31. Although the Biden and Trump administrations have changed the end date of the moratorium several times, the president has said it will be the final extension.
The Trump administration issued the moratorium, which suspended federal student loan payments and suspended debt collection efforts, at the start of the pandemic. The policy affects more than 36 million Americans, with collective debt of about $ 1.3 trillion, the Associated Press reported.
But several of the top companies that handle federal loans spent more than $ 4 million in 2020 and have already spent more than $ 2.4 million this year on lobbying. These companies profit from getting federal contracts and earn a commission on every loan they service.
Navient Corp, one of the nation’s largest student loan companies, spent more than $ 1.7 million on lobbying efforts in 2020 and has already spent more than $ 970,000 in 2021. The Delaware-based company has also spent more than any other student loan group since 2015..
The student loan company lobbied against the Equity in Student Loan Relief Act, legislation that initially suspended loans and debt collection, in 2020. It also reported lobbying conversations on issues related to the COVID-19 loan relief this year.
Navient has come under scrutiny in recent years for misconduct regarding student loan payments. In March, the company lost a multi-year lawsuit with the Consumer Financial Protection Bureau, which claimed Navient had cost students hundreds of thousands of dollars by directing them to more expensive payment plans that benefited the company.
In the same year as the CFPB lawsuit, Pennsylvania Attorney General Josh Shapiro sued Navient for “engaging in unfair and deceptive loans and failing to come up with proper repayment plans for students.” Navient filed a motion to dismiss the case, but the United States Court of Appeals for the Third Circuit dismissed it last July.
Sallie Mae Corp, a financial institution that offers private student loans, has also spent a lot of money lobbying over 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 payments on federal student loans, as well as issues with federal student loan programs as well as private student loans. Sallie Mae has also been involved in lawsuits accusing the company of misconduct in handling loans.
NelNet Inc, another firm that manages federal student loans, has also lobbied against the extension of the student loan moratorium, reporting conversations about the “scope and implementation” of the CARES Act related to debt relief. student loans in 2020 and 2021. The company spent $ 230,000 in 2020 and has spent $ 110,000 so far this year.
Navient, Sallie Mae and NelNet also spent thousands of dollars in campaign contributions. The companies were among the industry’s top five contributors last year, spending a combined total of nearly $ 400,000 on campaign contributions to Democrats and Republicans.
But several Democrats, including Senate Majority Leader Chuck Schumer (DN.Y.), Senator Elizabeth Warren (D-Mass.) And Rep. Ayanna Pressley (D-Mass.), Are using the moratorium to pressure 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 write off 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 dampen our entire economy, ”the three politicians said in the statement. “Canceling student debt is one of the most important actions President Biden can take right now to build a fairer economy and fight racial inequality.”
Although Biden has expressed support for the student loan cancellation, he has made it clear that he has no intention of forgiving it entirely. In February, House and Senate Democrats pushed Biden to write off up to $ 50,000 in student debt by executive order, but the president said he would only excuse $ 10,000 and preferred Congress draft the legislation.
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