Advocates for student loan borrowers are redoubling their efforts to convince President Biden to write off student loan debt amid an increasingly unstable federal student loan administration system.

Yesterday Navient – one of the nation’s largest student loan service companies – announced plans to end its contract with the U.S. Department of Education to manage student loans held by the federal government. Nav’s announcement comes just two months after FedLoan Servicing and Granite State Management & Resources made similar decisions to end their contracts with the government. Cornerstone, another service provider under contract with the Department, left the federal student loan management space last year.

Collectively, these departments manage approximately 16 million student loan borrower accounts, all of which will now need to be transferred to other loan management companies in the coming months. Although Navient is offering to transfer their accounts to another loan management company, this plan must be approved by the Department of Education. The Department has yet to announce a transition plan for most of the other affected accounts. The climate of uncertainty is whether other student loan service companies will announce their departure from the federal loan system in the weeks or months to come.

The disruption in the student loan service and associated service transfer schedule is further complicated by the resumption of federal student loan repayments scheduled for late January. Federal student loan payments and interest have been suspended for more than 18 months; the Biden administration issued a final extension of the payment break until Jan. 31, 2022. Tens of millions of borrowers resuming repayment at the same time is in itself an unprecedented event; doing so during what is becoming one of the biggest upheavals in federal student loans in recent memory is completely uncharted territory. The transfer service by sub-contractors of the Ministry of Education has always been chaotic, with many problems reported including lost files and missed payments.

Amid this widespread uncertainty, advocates for student loan borrowers are renewing their calls for the Biden administration to address the issue by massively canceling student loans.

“Navient is now the fourth federal student loan manager to withdraw from the government service contract. But forty-three million federal student loan borrowers don’t have the luxury of opting out of a system that has failed to adequately protect them, ”said Persis Yu, director of the aid project. to the National Consumer Law Center student loan borrowers, in a statement yesterday. . “The financial future of borrowers is at stake while the ministry decides what to do next and they deserve action that recognizes large-scale systemic failures. We call on President Biden to immediately commit to large-scale administrative debt cancellation. “

“16.5 [million] student loan borrower accounts will need to be moved to new departments, ”the Debt Collective – a debtors union and student loan borrower advocacy group – wrote in a tweet. This has “historically resulted in devastating financial mistakes … If we write off all student debt, we won’t have to transfer accounts to new providers and see millions of people suffer.”

“Borrowers deserve greater responsibility and better service throughout these transitions,” Senator Elizabeth Warren (D-MA) tweeted on Tuesday. “The only way to ensure that they do not face the same predatory behavior … is to #CancelStudentDebt. “

Despite the calls, the Biden administration has shown no indication that it plans to adopt a blanket student loan forgiveness. Biden has pledged to support broad student debt cancellation during his presidential campaign, although he has not indicated he will do so through executive authority, as supporters of the student loan cancellation have him. urged to exercise.

Congressional Democrats, including Senator Warren and Senate Majority Leader Chuck Schumer (D-NY), as well as some prominent student loan legal experts, have argued that the Higher Education Act gives the president a broad power to cancel student debt without involving Congress. Officials working under former Education Secretary Betsy DeVos disagreed, however, suggesting that the massive cancellation of student loans would be contrary to Congress intent. Congress has shown no willingness to pass a student loan cancellation bill and is currently focusing on more pressing issues, including the prospect of a government shutdown.

In April, President Biden asked his administration to initiate a legal review to determine whether there is valid legal authority to enact a massive student loan forgiveness using executive action. The administration has not announced any formal conclusion of this review. But recent comments from administration officials suggest that neither the return to repayment in February, nor the current upheaval in the federal student loan management system, will result in a massive forgiveness of student loans.

“We can expect that many, many borrowers will not be eager to return to repayment when they have been led to believe, or even hope, that this would never happen” because of the cancellation promises student loan, said Richard Cordray, chief operating officer for federal student aid at the US Department of Education, in remarks earlier this month. “Overcoming this psychological hurdle with millions of Americans can be a lot harder job than we know. “

Further reading

What Navient and FedLoan borrowers should know as major changes in student loan service loom

Huge upheaval in student loan management: this important loan manager terminates his contract

These student loans are excluded from Biden’s forgiveness and loan relief programs – here’s why

Student loan borrowers: expect these 4 things by January