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tv   Federal Student Aid COO Testifies on Priorities Policies  CSPAN  November 26, 2021 8:02pm-10:59pm EST

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c-span now, our new mobile app. join the discussion with your phone calls, facebook comments, text messages and tweets. >> up next, a house hearing on student financial aid including the resumption of student loan repayments in 2022, the public service loan forgiveness program, and the possibility of broader loan forgiveness. this is two hours 50 minutes. >> this meeting will come to order. welcome everyone. i note for the subcommittee that mr keller of pennsylvania and mr fitzgerald of wisconsin are permitted to participate in today's hearing with the understanding that their questions will come only after all, members of the subcommittee on both sides of the aisle who
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are present have had an opportunity to question the witnesses. the subcommittee is meeting today to hear testimony on policies and priorities of the office of federal student aid. this is an entirely remote hearing. microphones will be kept muted as a general rule to avoid unnecessary background noise. members and witnesses will be responsible for unmuting themselves when they are recognized to speak or when they wish to seek recognition. i also ask that members please identify themselves before they speak. members should keep that cameras on while in the proceeding. members shall be considered present in the proceeding when they are visible on camera and they should be considered not present when they are not visible on camera. the only exception is if they are experiencing technical
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difficulty and inform committee staff of such difficulty. if any member experiences technical difficulty during the hearing, you should stay connected and make sure you are muted and use your phone to immediately call the committee's it director whose number was provided in advance. should the chair experience technical difficulty or need to step away to vote on the floor representative bon amici or another majority member is hereby authorized to assume the gavel in the chair's absence. this is an entirely remote hearing and as such, the committee's hearing room is officially closed. members who choose to sit with their individual devices in the hearing room must wear headphones to avoid feedback echoes and distortion resulting from more than one person on the software platform sitting in the same room.
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members are also expected to adhere to social distancing and save health care guidelines including the use of masks, hand sanitizers and wiping down their areas both before and after their presence in the hearing room. in order to ensure that the committee's five minute rule is adhered to staff will be keeping track of time using the committee's feel timer. the field timer will appear in its own thumbnail picture and will be named 001 timer. there will be no one minute remaining warning. the field timer will show a blinking light when time is up. members and witnesses are asked to wrap up promptly when their time has expired. pursuant to committee rule 8c
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opening statements are limited to the chair and the ranking member. this allows us to hear from our witnesses and provides all members with adequate time to ask questions. i recognize myself now for the purpose of making an opening statement. today we meet to discuss the office of federal student aid work to support and protect student borrowers. mr kadre, welcome to the committee on education and labor and your first hearing before congress in your role as f.s.a.'s chief operating office. we are honored to have you here this morning under your leadership, it manages federal financial aid programs including pell grants, and federal student
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loans. this is a tremendous responsibility as there are 43 million federal student loan borrowers who owe more than 1.5 trillion dollars. alarmingly, under secretary devol and president trump, the department abandoned its responsibility to american students and taxpayers including by withholding debt relief from hundreds of thousands of students who were defrauded by low quality institutions allowing predatory institutions to collect millions of dollars from taxpayers shielding student loan servicing companies from regulatory agencies and state law
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enforcement and failing to ensure borrowers receive accurate information about critical programs such as the public student loan forgiveness programs that are designed to support student borrows and their families. so i am grateful that we now have an education department that is listening to student borrowers and working diligently to better support them. i recently heard from a constituent who is a teacher with nearly $100,000 in outstanding student loan debt. his loan balance has ballooned because the monthly payments that he can afford to make have failed to keep pace with the interest on his loan.
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this experience is not unique which is why i applaud the transformative actions that the department of education has taken under your leadership and the leadership of secretary cardona to provide hundreds of thousands of student borrowers with the long relief they were legally entitled to receive. and i look forward to the outcome of the department's ongoing negotiated rulemaking process, which will hopefully provide further relief to low income borrowers and others and streamline the long repayment process. in august, the administration took action to discharge the loans of 364,000 borrowers who have a total and permanent
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disability. the department also made important changes to streamline and automate relief for eligible borrowers in the future and ensure that their loans are not mistakenly mistakenly reinstated. the biden administration has also approved student loan relief for 92,000 student borrowers who were defrauded by their institutions and secured relief for an additional 115,000 federal student borrowers who were left stranded. now the sudden collapse of i.t.t. technical institute and most recently, the administration announced major changes to the public service loan forgiveness program, both through a time limited waiver
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and the rulemaking process to keep a promise to nurses teachers, first responders and other public service workers. many public servants across the country have already been notified that help is on the way . in total, the biden harris administration has erased $9.5 billion in loans for 563,000 borrowers. in many cases, the relief provided as help give borrowers and their families a second chance to a better life. i also applaud the steps the department has taken to protect students and taxpayers from low quality institutions, including reinstating the fsa's
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enforcement unit, which was dormant under secretary devos. while the department's progress has been encouraging, fsa is facing a series of major hurdles that are on the horizon. the upcoming return of loan repayment presents a monumental task for fsa and student loan services. we must ensure that students receive the education and support they need to begin repaying. they're gonna need a lot of support to transition. many borrowers may be unsure of their rights and responsibilities and are experiencing continued financial hardship caused by this looming
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pandemic that may entitle them to change their repayment plans. we have to monitor this very carefully. long serving companies need a robust and well trained workforce to support an increase volume of borrower request as repayment begins. and finally, while the shift to next gen is a major opportunity to make long needed reforms to student loan servicing the , continuous delays under the trump administration have left ssa with no margin for error. this hearing is a chance to learn about the plans to address these critical issues, how
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they're balancing various priorities and what is being done to ensure that low income borrows and others at risk groups received the appropriate attention from their long -- loan services and fsa. black students are the most impacted by student loans. i look forward to our discussion in the work you have ahead to ensure that all students, all students in this country can access high quality higher education without taking on debt they cannot repay of falling victim to predatory institutions. thank you again, mr, kadre, for
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being with us today and for your work to secure relief for student borrowers, we applaud you. i now recognize the distinguished ranking member of the response of making an opening statement. welcome. dr. murphy. dr. murphy: thank you, madame chairman. thank you very much for those opening comments. i appreciate the complexity of this issue. we have so many people that don't understand that signing on the dotted line means that they have to pay money back. we have understanding unfortunately, that so many of our institutions of higher education have not been bastions of financial prudence and therefore are those financial burdens are laid upon those students. so it's really a multifactorial problem. we need to get on our institutions to cut back costs so that students do not have their their futures forsaken.
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so i appreciate the comments. so you know, the office of federal student aid is an important agency that is responsible for over the overseeing the disbursement of over 100 billion in grants loans and student aid dollars each year. through such aid, millions of students are able to pursue post every post secondary education who would otherwise not have the means to do so. fsa is also tasked with overseeing one of the greatest challenges the department of education has faced since. ex except inception, returning nearly 45 million borrowers into repayment status after nearly two year hiatus. in response to the covid 19 pandemic, the stakes could not be higher as the consequence of a failed transition would be catastrophic. as millions of borrowers, those who signed on the dotted line could needlessly default on their loans, thus ruining their own financial future. unfortunately, this office has bowed somewhat to partisan
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politics and put the wishes of the democratic party progressive base over the immediate needs of those students who they served instead of working with its partners to ensure the transition to repayment run smoothly, fsa has taken to an us versus them approach treating these contractors more like adversaries and the critical partners that they really are. it's not a stretch to assume that such rhetoric from the highest levels of fsa contributed to the exit of several federal student loan services over the last year. we have collectively served 16.5 million borrowers and further fsa is currently carrying out the implementation of the fafsa simplification and the future act. instead of focusing on their implementation, which is critical to the dispersement of federal student aid dollars, fsa has decided to spend its energy harping on for profit colleges through the revival of an obama era enforcement unit while turning a blind eye to the misdeeds of institutions that serve the vast majority of
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students. to make matters worse, the biden administration is using a permanent pandemic narrative to expand its takeover of higher education, recently announcing an executive action to overhaul the public service, public service loan forgiveness program in direct conflict with the law democrats unilaterally wrote. this will undoubtedly take away necessary resources that should be allocated to the soon to be disaster in the federal student loan program. this policy is fundamentally unjust. it puts taxpayers the majority of whom do not own a college degree on the hook for billions of dollars in student loans inspired by individuals 00:16:16 -- making more than those taxpayers. this is one of the top 10 billion tax. this is on top of the $100 billion. taxpayers are already responsible for due to the
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continuation of the student loan repayment pause, and usurping -- fsas lack of leadership will ultimately hurt the very students it claims to care about . for these reasons, i am glad the chairwoman has called this hearing today, but unfortunately we have received little or no response with the exception of a letter that did not address our questions as i would expect should be the case. unfortunately -- fortunately rather, we have the chief operating officer to provide answers to these critical issues, and i look forward to hearing more details on all of these issues. thank you. with that i will yield back
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. madam chairwoman: mr richard corday is the chief operating officer federal student aid fsa of the probably prior to his role. mr cordray served for six years as the director of the consumer financial protection bureau. before joining the bureau he served as ohio's attorney general and also served as ohio treasurer and ohio state representative and ohio solicitor general. welcome. we will now hear from our witness today.
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mr. cordray: thank you. madam chairwoman: we appreciate you for participating today and look forward to your testimony. let me remind you that we have read your written statements and it will appear in full in the hearing record. pursuant to the committee rules and committee practice, you were asked to limit your oral presentation to a five minute summary of your written statement. before you begin your testimony please remember to unmute your , microphone. despite your testimony, staff will be keeping track of time and a light will blink when time is up. please be attentive to the time . wrap up when your time is over and re mute your microphone. if you experience technical difficulty during your testimony or later in the hearing you should stay connected on the
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platform. make sure you are muted and use your phone to immediately call the committee i.t. director whose number was provided to you in advance. after your presentation we will move to member questions when answering questions. please remember to unmute your microphone. the witness is aware of a responsibility to provide accurate information to the subcommittee and therefore we will proceed with his testimony mr. cordray: thank you. i think i jumped the gun there a moment. thank you for allowing me to testify today about federal student aid's priorities and though i'm no stranger to testifying before congress this , is my first occasion in my new position. right now at fsa we face great challenges as we seek to provide the quality service that students borrowers and families deserve. everyone has felt the effects of
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covid-19 which has produced a notable down turn in both fafsa completion and enrollment rates. this should be of great concern to all of us who want to see our country achieve its full potential for generations to come. our top priority every year is to ensure that students and their families have reliable uninterrupted access to the financial help they need. the fafsa form itself is facing huge changes as we implement to new laws you pass to improve the student aid process. the changes you legislated will make it easier to complete the fafsa form unlocking aid for many more americans. the operational challenges are extensive and we're being deliberate and strategic and planning to implement them. we're also working to reform the facts of verification process to reduce the burden on eligible students and their families helping them secure a financial aid while protecting taxpayers. fsa is also charged with serving students across the full life cycle of student aid. as you know, many millions of borrowers already are in repayment and we're making changes to better serve them. for example, the department of
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education recently announced dramatic changes to the public service loan forgiveness program that fafsa will now carry out. we intend finally to fulfill the programs promised to secure loan relief for service members teachers, nurses, police firefighters, and others who have chosen to put community over self. we're also reviewing and improving other special forgiveness programs such as total and permanent disability. the department is considering ways to improve these programs through the ongoing negotiated rulemaking process and we're collaborating with other federal agencies by leveraging data matching to streamline or automate loan forgiveness. in addition to better meet the needs of everyone who owes money on their student loans, we just successfully secured contract extensions for the loan services who will continue to work with us over the next two years. this is a milestone because for the first time we've secured new performance and accountability metrics that require services to put borrowers ahead of their own bottom lines, including penalties to make sure they do. we look forward to working with
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those services that stepped up and grasp the shared vision of our responsibilities here. we will also improve transparency by expanding required data reporting. let me say here that it was not i but our negotiating team that did great work to secure these key changes that benefit borrowers with no per account price increase for taxpayers to ensure accountability. fsa has created an office of enforcement to boost oversight of schools and reduce risk for students and taxpayers to do this. we will work closely with our colleagues in the department and with federal partners and with our state partners as well. we will also listen and learn from the community groups who advocate for students and borrowers. these relationships will help us achieve the goals that you and the congress have set for us above and beyond all this work challenge unique to the coming year. the unprecedented task of returning tens of millions of students and bars back into repayment after a pause. it was extended multiple times over almost two years.
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during this time, borrowers generally have not been required to make regular payments have been subject to 0% interest and if in default had collections stopped on their outstanding loan balances. in august, the department announced a final extension to these pandemic relief measures until january 31, 2022. we know this will not be an easy transition. this is a defining moment for fsa and it's crucially important for millions of americans that we succeed. we're working to execute a comprehensive plan to combine elements of borrower outreach service, are higher hiring training and preparation, policy enhancements and oversight to help borrowers effectively manage the process of returning to repayment. the core of our plan is clear communication, quality, customer service and targeted support for those having trouble making their payments. we and our services are engaged in forming bars about this deadline of what is expected of them. we ask you to help us spread the word so nobody is surprised or
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unprepared. we want to be sure borrowers know their options such as applying for an income driven repayment plan to make their monthly payments more affordable. we also encourage borrowers to sign up for auto debit program which is the easiest way to make their current monthly payments. there's nothing abstract about the challenges we face. if we're to succeed as a nation we must answer the call for the millions of americans who depend on federal student aid as a path forward to better their lives. as each borrower succeeds, we all succeed. this idea is ingrained in the mission of sf -- fsa which at its core is to enable the american dream. we appreciate your help and support as we move forward together to this end. thank you and i look forward to answering your questions.
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>> thank you, mr. cordray, thank you, for your testimony on the committee rule 9-a we will now question witnesses under the five-minute rule. i will be recognizing subcommittee members in the following order. again, to ensure that the members' five-minute rule is third to, staff will be keeping track of time and the time will show a blinking light when time has expired. please, please, be a-10 active to the time. wrap up when your time is over, and mute your microphone. as chair, i now recognize myself for five minutes. mr. cordray, i applaud the actions taken to restore faith in the public service loan. however, for many borrowers, 10 years is too long, and they can't wait that long for relief. what would be the impact of
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providing forgiveness on a tiered basis? for example, by allowing borrowers to have a portion of that debt erased for every year of qualifying service? mr. cordray: thank you, madam chair. i appreciate the question. and let me start by saying that of course congress has the -- passed the law that provides for a tenured time frame and congress could change that time frame if congress sees fit. it wouldn't be for me to change that time frame although we would be happy to provide technical assistance and input into what the operational effects of that might be. we are working to implement the changes that are being made in the program currently important, dramatic changes that are going to benefit as we say all the people who deserve public service loan forgiveness but haven't had it in the past. those are service members, police officers, firefighters, people who have really stepped up during the pandemic and put themselves at risk for the
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benefit of the rest of us. and so whatever changes you might want to make in that program we'll be happy to work with you to understand what they are and give you whatever input we can to be of help to you. >> thank you. i drafted a bill to address that so you should -- we'll elicit your help in finishing that product. also, can you explain to us what operation for a fresh start. that there's a specific operation, fresh start. there are policy matters under consideration. uh, the department as to what the effect of the repayment
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restart that's happening after january 31st 2022 will be on defaulted borrowers. it is understood that delinquent borrowers will be returned to current status and we'll move forward to try to put them in the right position to succeed in returning to repayment. as for defaulted borrowers, those are matters that are under consideration right now and i don't have more for you on that at this point. madam chairwoman: thank you. studies have shown that disparities and student loans that are deeply rooted in racial wealth disparities. what is the plan for addressing racial and social economic disparities and student loan default and negative amortization. mr. cordray: so in general, you know, we're looking and looking carefully at how we can improve the repayment programs here. as you mentioned at the outset, there's more than 40 million americans who owe money on student loans when you think about 40 million americans and their families were getting to half the population of this country. so it's a major, major issue, as you say correctly, the number of people who are in default on their loans or people who are having trouble repaying their loans.
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there is some racial inequity in those numbers we believe. however, what we want to do here is to administer this program fairly, which ultimately will benefit taxpayers because what can be repaid will be repaid. and what is more difficult? there are programs for that, such as income driven repayment uh and other other programs that borrowers should get signed up for. and we're working hard with our services to make sure that borrowers know those options and services make it as easy as possible for people to access those options. and we made some changes at the department to accomplish that as well. but we're keenly aware of what you say about the differential effect of this on american people. and we want to make sure that the program works as well as it can. and we think there's lots of room for improvement here. madam chairwoman: reportedly
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president biden has asked to prepare you to prepare a memo on the president's legal authority to forgive student loan debt. what is the status of that memo and once finalized, will it be made public? so i think it's widely known that there have been legal memos prepared across the government and that the white house has been taking them under consideration. and that's a matter for the white house to determine. obviously not for me, whatever is determined, we will implement it. i do think that student loan forgiveness helps many worthy borrowers help get back on their feet, but we will see what happens and whatever it is, we will implement it as best we can. and as smoothly as possible for borrowers and taxpayers. madam chairwoman do you know : when that will be made public. do you have any timelines from the white house? mr. corday: i do not. madam chairwoman okay, so much. : thank you. and now i will yield to our ranking member for his questions. dr murphy from north carolina. dr. murphy: thank you, madam.
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i'll just turn up my volume here. thank you for the insightful questions. let me just run a couple of things by, as you're aware, through the cares act and the executive action. student loan buyers, borrowers rather received significant relief since march of 2020. it was significant relief in a in a very bipartisan act of congress. but in addition to the payment borrowers seeking forgiveness, underpay slf have moved nearly two years closer to forgiveness because such payments have been counted towards the requirement. this was a significant benefit for these borrowers. would you agree? mr. corday: yes, i believe it is. dr. murphy: right. i mean, i do too. i think it's a major benefit for those powers. is it reasonable than to argue that particularly with respect to those who did not suffer joblessness, such borrowers are in a better position financially in relation to their federal student loans and they were prior to the pandemic. would you agree with that?
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mr. corday: i think it's very hard to say on that question. just because the pandemic has affected many public service employees, there are a lot of jobs that have been cut or people have had their hours cut back because of the budget problems that we all experience early in the days of the pandemic. congress provided significant relief that i think helped state and local governments and the federal government in various respects. and that has staunched some of the damage in terms of whether borrowers are in better position today than they were before. the pandemic, that's going to vary dramatically from one community to another and one household to another. dr. murphy i would not disagree. : i would just submit however, that the vast majority of individuals who still stayed employed did not have their hours cut back and they're in a better position. the reason i ask these questions is because the department has recently announced a major overhaul of the psl f program using authority provided to the secondary secretary under the heroes act in 2000 and three.
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and so under this authority, the secretary may waive or modify any statutory or rig a tour provision applicable to the student financial assistance programs under title four of the to to ensure that recipients of student financial assistance under title four of the act, who are affected individuals which are those who suffer direct economic hardship as a result of a military operation or national emergency, but are not placed in a worse position financially in relation to that financial assistance because of their status. is that correct? mr. corday: it's my understanding that the heroes act which was passed a course by congress does give the secretary substantial authority here and that was exercised as well as other authorities that are granted to effectuate this relief on the public service loan forgiveness program.
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dr. murphy: so we agree that there is heterogeneity and what all of all our programs and all that that our borrowers are facing and that a one size fits all approach is probably not be actually correct approach. would you agree? mr. cordray: you know, i think that's a broad statement. i would like to know specific instances. i think sometimes they brought approaches simplest to implement, but sometimes a nuanced approach is much more congruent to the situations of individual families and councils and communities. so it depends. >> yeah, i would agree, madam chairman, i'll just take a point of order here. my clock seems to have frozen and i don't want to take off my time were all frozen in time here. so let me go on just to another question mr cordray. president biden has made it clear that forgiving student debt is a top priority for his administration has stated on multiple occasions he would sign a bill for giving $10,000 in student debt for all borrowers if congress wants sent to his desk, do you support this policy?
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has anyone in the department of education asked you or your team to process to forgive $10,000 or some amount for all borrowers or or are there other forgiveness plans that you have undertaken a part of the process? dr. murphy: so just just to reset my position here, that's a policy decision. i have an operational job. my job is to take whatever policies are adopted whether by congress of course in the first instance the statute or the department through regulatory authority or authority given by congress and make sure that's carried out effectively. we have our hands full to do that job with all the various things falling on us right now, including return to repayment. as you noted that the opposite is a major major challenge. so i would just i would differ on the question of what is my personal preference here? all right, so you don't have a personal preference. and so if the president said everybody gets $10,000 off you just do your job and implement it. correct? mr. corday: i think if that were the decision, it would benefit many many borrowers who are otherwise in trouble, some of
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whom never finished college and never got the benefit of the barn there. and so i can understand why that would be considered important. and i and we will see what happens. but it is not my decision to make. i just wanted to caution them. yeah. dr. murphy: and i say to those individuals who didn't finish college that that was a risk that they took and they're still just because they didn't finish college doesn't mean they didn't have their risk. i just this blanket forgiveness stuff for especially being paid by people who never even went to college. i think it's exceedingly unfair. do you have an estimate by any chance if we did implement this , $10,000 per borrower forgiveness, what it would cost the taxpayers of the country? mr. corday: i do not. i'm sure people are preparing various estimates of that, but my job is to implement the law and the policy is it's established that is not yet a policy that's been established. and so i'll wait and see on that. dr. murphy: so, from my understanding, the estimates are
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about $373 billion. you know, the nation goes further and further in debt these days. and so just problematic, i want people to get up to work and not be uh not be overrun by by by debt, but there's also a part about personal responsibility that when you sign on the dotted line, you know what you're putting forth, there's also responsibility from our institutions to uh not ruin our citizens. so i'm over my time. i will yield back. madam chairwoman: thank you. thank you. thank you. >> thank you, madam chair, appreciate it and thank you so much for everything you've been doing and everything i know that you're going to do. federal student aid is intended to enrich underserved students. but sadly for profit colleges have been more interested in using these funds to pad their pockets in exchange for student load debt and unusable degrees.
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63% of low-income graduates from these institutions will never earn enough in their lifetime to be better off than a high school graduate. however, by simply enforcing existing laws to hold for profits accountable and make them ineligible for federal student aid, students and taxpayers won't have to endure these enormous costs. the proliferation of predatory for profits can be traced back to their ease of access to federal student aid. i'm going to be reintroducing my bill. the students not profits act to stop for profits from abusing these funds, but the department of education already has broad authority to act on its own . provisional program participation agreements are temporary certifications as you know that fsa gives to schools to work towards meeting federal student aid standards, predatory colleges are not entitled to student aid. therefore, these agreements should be limited. will you ensure that provisional agreements are not treated as entitlements by giving very clear guidance on what factors make a school eligible for one.
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mr. corday: thank you for that question and it touches as you know, on a range of areas. so i'll try to give you a response that is not simple, but if it goes on too long, feel free to cut me off at some point. ok. look, everybody probably knows the history when i was the director of the bureau, we saw two major chains of for profit colleges, the corinthian colleges set of schools and it that we could see we had the data. they were failing students, they were not keeping their promises to students, they were abusing the federal student aid programs. we took action against them and both of them were shut down. and there were many, many students, many thousands of students who were affected by that and have gotten student loan relief as a result under the closed school dissent charge -- discharge provisions and so forth. at the fsa we have just created an office of enforcement. it's actually reinstituting
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something that was done five years ago that was rolled back into the previous administration. i think it is better for taxpayers, better for the public and it will be better for borrowers if we have strong oversight over these programs around the country. now, let me just say it doesn't target a particular category of schools as between for profits, nonprofits, public schools. but we will go where the risk is greatest and where we see people failing borrowers, where there are high cohort default rates, whatever school that is, we will look at that and go after that if they're high delinquency rates, if there are other ways in which these schools are failing borrowers, it maybe and a lot of data would suggest that that will be more frequent problem at for profit schools. if so, those are the ones we will we will target not because of their status, but because of what their performances for borrowers and taxpayers. and i think that's the right approach. but we'd be happy to have input from you all as we develop that office and we set it to
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priorities about what the right way is to handle this. >> we'll follow up for sure with you on that because we have some thoughts on that. i guess, you know, just following revoked provisional agreements when they've been violated, and so that is going to be important for us. and i think, you know, the other thing i want to just ask you about, one of the requirements for institutions to receive direct loans includes a timely submission of financial reports, but many failed to do so. the law clearly requires those audits before an institution can originate loans and yet to date, the department has never denied their eligibility for direct loans. so will the enforcement unit that you're setting up increase that accountability for participation in direct loans and other types of federal student aid? mr. corday: it's an excellent question. it's part of the answer that i was starting to give that i
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didn't get to, which is this. you know, schools need to have agreements that direct their performance and they need to be held accountable for that performance. and there need to be protections for taxpayers here, whether it's posting of letters of credit, which is appropriate in certain instances, whether its signature requirements. these are all things we're looking at. these are all things that probably should be used more substantially than they have in the past. we will look at those things again. we'll be glad to take input from you all on that. but we do think that schools can't just walk away from their obligations. leave tax holders holding the bag and anybody could think that that's a fair and appropriate system. >> thank you. i yield back. adam chairwoman thank you so : much. mr grothman from wisconsin.
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>> can you hear me? madam chairwoman yes, we can : hear you. >> okay, thank you mr cordray for coming on over. the office of financial student aid is in charge of producing reports to congress on the department's experimental sites. one of the sites that i'm interested in is called direct loan program limiting unsubsidized loan amounts. that site was created in 2011 and the department has yet to submit a report to congress on its results despite a clear statutory mandate to do so earlier this month. ranking member fox and i sent you a letter to the department requesting the overdue report, and we haven't even received an answer yet. will you commit that you will fulfill your statutory mandate and submit a report on this experimental site by next week? mr. corday: so let me say that to the extent that that is a commitment do you think was made and that can filled, going back to 2011, that is 10 years, and i have been here now for a few months, and i have not heard of that before.
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what i will be happy to do is take that back. , take that back within the department talk that through and get you an answer to your question, which it seems to me you deserve if in fact what you're correctly stating is a statutory requirement that hasn't been met over the past 10 years, we will understand why that has been so and we will look to make sure that we're fulfilling all statutory requirements that were expected to fulfill. so i take that seriously and we will take that back and we will get you an answer, whether we get you a report within a week -- if that's okay? >> thank you. second thing, on a staff, -- staff call, he said that the office of federal student aid works with the consumer financial protection bureau to monitor federal student loan servicers during the conversation, you noted that you
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were unaware if there was a formal agreement in place, such as a a memo of understanding or something more informal and that you would check on that, do you know, is there a memo of understanding between fsa and the bureau and if so, what information does the fsa share with the bureau and vice versa? mr. corday: so, my understanding is that the proper approach here is one federal government and the different agencies of the federal government that have overlapping responsibilities should help one another in service of fulfilling what ultimately, our objectives that were set by congress in the law. all right, so, we want to carry out the law as you gave us most effectively. sometimes, that's done through memoranda of understanding when there's formality that is needed. for example, when i was head of the cfpb, we were required by law to have a memorandum of understanding with the federal trade commission.
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we will be looking at those situations. other times, the agencies just collaborate and cooperate on a more informal basis. we will look at those situations and determine what's appropriate, and if your office wants to give input into that, we will be happy to hear that from you. okay. >> is there a memoir memorandum of understanding there? mr. corday: again, it's complicated because there might be there are different issues, there might be a complaint intake and resolution. there might be enforcement and oversight. there are different aspects, but we can get to a very specific answer on that if you'd like. >> okay. finally, where is the statutory authority for fsa? are we in the statutory -- where in the statutory authority for fsa does it allow you to see your responsibility and give authority to another agency? where is it authorized to exercise authority over federal loan services or take action against them? and i don't think it does. so you and secretary cardona are responsible for running fsa and overseeing the federal contractors.
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despite partisan policy wishes the statutory language is clear and your performance based metrics are based on your work and fsa and not handing your work to another agency. do you believe that? mr. corday: yeah, i'd like to frame it a little differently. okay. i don't think that we should hand our work to another agency . that wouldn't be appropriate. we have statutory authority to do certain work and we need to carry it out and we will. the cfpb also has its own statutory authority and they have work that they need to carry out and they will, sometimes those areas of work will overlap. and when they do overlap the right way for us to handle it so as not to duplicate efforts for taxpayers or waste effort is to coordinate and to consult closely together so that we get the best bang for our buck collectively where there is overlap. so that would be how i would frame it, i believe. >> okay, it's not like a
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relationship, say, with ftc, because that relationship is authorized under higher ed, is there any reference to cfpb? mr. corday: so, again, i wouldn't only look at the higher education statutes. i'd look at the cfpb's own statutes. they do have authority. i recall it well, i was the director of that agency. they have authority over student loans to a considerable degree. we work cooperatively with the department of education during that period and vice versa. we will work cooperatively with the cfpb where there are areas of overlap. again, i'd be happy to follow up with you further on that as you, -- >> we will give you a follow-up question. thank you. >> well, thank you so much. chairman wilson and ranking member murphy also, thank you mr cordray for the excellent work you're doing on student loans. it's a very difficult issue and i think that the path you are leaving is so helpful to so many
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of our students. i wanted to get your perspective on the importance of financial fitness for students understanding important , financial concepts like saving for retirement, managing student loan repayments, investing is really fundamental to closing the wealth gap in our country. tomorrow i'll be introducing the bipartisan financial fitness act with my colleague congresswoman spartz and our bill would require the secretary of education to create a public financial resources online port to help students build these financial competencies. could you speak briefly about uh whether the ability and the lack of knowledge of important
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financial concepts makes it difficult for students to stay on track with loan repayments and increase their wealth in the long run? mr. corday: let me just make a quick comment on the beginning of your question, then let me turn to your question, which i consider quite important. it's very near to my heart. the comment i would make is you said at the beginning that i'm doing excellent work. i've been here six months. i worked as hard as i can every day to do as much as i can, but i do very little myself, the people at fsa, the 1400 colleagues i have here, i have found to be high performers. they're making a huge difference. they're taking on very significant challenges that the the other questioners have touched on and i'm sure we'll touch on further and they're doing a terrific job and i appreciate that. and i'm grateful for it. as to your question about financial fitness this is , something that's been near to my heart i will tell you for 20 years, actually 30, goes back to in the legislature i pushed for
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a financial fitness provision in the state of ohio. later at cfpb i was the vice chair of the financial literacy education commission, which is a set of agencies that brings together all the federal government departments and agencies that deal with financial fitness. and we worked on a number of initiatives. now that i'm back here last month, i'm looking forward to working with them. there is much we can do as you say, to help families understand what their obligations are, what their risks are and make good choices with eyes wide open before they get into a problem. and the college scorecard, which is something we pioneered when i was the director of cfpb -- and now the new director of the euro got that accomplished with the department of education and something we built on over the years, which again gives, gives families the right information
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when they needed to make good choices. and that will make family is better off in this country, but these are hard matters. as you say, they're complicated issues. the understanding of money is not always as deep as we would like and it's something we need to work at every day to make this country stronger. >> thank you. and you know, we use the term financial fitness in a housing organization, that i helped lead for 20 years, so now that we talk about it not as illiteracy, but it's what makes us strong quickly. the fsa under your tenure has prioritized improving the public service loan forgiveness program. i know you have started negotiated rulemaking to make permanent changes. you also recently announced a limited time waiver of some of the eligibility criteria. can you talk to us about what steps fsa is taking to communicate with borrowers about this, and why it is so important
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to make sure that student borrowers know about this benefit and can apply. mr. corday: i appreciate that question. i go back to the old saying if a tree falls in the forest and no one's there to hear it, does it make a sound. you know, we have some great advances here on the public service loan forgiveness program . if people don't know about them or don't know to take advantage of them, many of them will be wasted and they'll be missed opportunities for people. we don't want that to happen. we have already begun communicating to more than 500,000 current borrowers and we'll be reaching out to all borrowers who may or may not ever have applied before for public service loan forgiveness or may in the past have applied and been told that doesn't apply to you. but now there's new, broader criteria. we will be working to get that message up. but by the way, you all can help us get that message out. your constituents listen to you.
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they respect you. they know you know things and if you tell them this is a new day, take another crack at it and see what you can find out for yourself, direct them to us and we will do our best to serve them. we would appreciate that. >> well, thank you very much. my time is expired and i yelled -- yield back. madame chairwoman: thank you so much. we do want our witness to know that we totally support the 10,000 loan forgiveness from the president of the united states. so that's the chairman of the higher education workforce on the labor and workforce committee education and labor , committee. mr. corday: i'll communicate that back to the secretary and that people of the department. madame chairwoman: thank you. and we look forward to this memo and when it is being published to the public. ms. mclean? ms. clean: thank you, madam
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chair and as always you're looking nice today. i appreciate you being here and i appreciate the opportunity to ask some questions. as you spoke earlier is you know, you want to protect the taxpayers and you want there to be some accountability. and i think we're all in agreement on protection for the taxpayers because at the end of the day the government cannot give $1 of which it does not take from someone else. so with that said, can you help me understand? it looks like in january roughly 45 million student loan borrowers will return to the loan payment process after almost two years of of not doing so because of the pandemic and whatnot. but recently under the biden
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administration we also have three of those nine loan servicers exit the industry. i have a couple of questions. of those three that have exited the industry, what is the dollar amount of the loans that they service? mr. corday: i'll give it to you the way i'm most familiar which is the number of accounts that we're talking about is a little more than 15 million. so it's a very significant part of the portfolio. >> thank you. who will service those accounts now? will they go into a new company? will they go into the other six remaining. how is that going to work? mr. corday: so i can give you a long and detailed answer and i will if you like. the short answer is there are other servicers who are quite eager to be participating in this program and to have more accounts and they are stepping up here. so for example the granite state portfolio is moving to ed financial, the navient portfolio is moving to maximus.
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the fia portfolio is the largest and therefore it's having to move to several services. but there is great interest in that. some of those accounts will move to -- >> thank you. if you could provide a written list of who's servicing those deaths, that would be helpful and have those already been determined? and have those already been determined? >> so i would say that much of it has been determined. some of it is a work in progress. the reason is because as we transfer accounts to other services, we want to keep and performance. and we have more accounts to those that are performing better, so i can't give you all the determinations yet because -- >> when you think you will be able to give us the aim of determination? it's three months or performance depending on how we count.
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the people who have the loans will have to begin to write checks to these people. >> yeah, what i just stated should be the answer for more than half the bar we're talking about. >> we'd be happy to give you what information we have currently and what information is not yet known and keep you updated on that over time since that's an interest of yours, if i'm hearing you correctly. >> i think it's an interest of mine and i think it's an interest of the taxpayers, one, to make sure we hold government accountable to making sure that government is really good at spending money. >> that's fair enough. we agree on that. we agree on that. >> we're working on a lot of stuff when it comes to loan repayments and getting our taxpayers money back. so one of the things i should just think we should be -- i
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think we should be cognizant of, and i know this from the 30 plus years i've spent in this business having signed the front of checks, not just the back of checks, is before we go out and give a bunch of money, let's make sure that we have the other end of the stick, which is let's also make sure we have a really good, solid program to recoup the money of which the taxpayers actually deserve. so -- >> i think that's where you and i agree, and maybe all of us can agree. to the extent we're spending money, we should be making sure we're getting value for that money. if we aren't getting value for the money, we shouldn't spend it. >> i like the political speak and i appreciate that. but i'm not talking about value for money. what i'm talking about is if i have a home loan, if i have a
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mortgage, and i'm saying to the bank, give me $200,000, the bank also has a really precise contract of which i need to repay that loan. i can't go back to the loan company and say i get a lot of value from living in this house. that doesn't really pay the bills, right? so as much as you and i appreciate the value for money, i'm going to take it a step further to protect the taxpayers. we are going to make sure we have a solid plan to recapture the loan repayment viewed so i look forward to it and thank you, madam chair. >> i appreciate your point and i understand it. thank you. >> thank you. >> you can follow-up. >> thank you. >> ok? thank you so much. and now, representative manning, you're live from north carolina. >> thank you, madam chair, and think of for being with us
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today. during the obama administration, the department worked cooperatively with state law enforcement agencies like the states attorney general, to investigate and hold unscrupulous colleges accountable. this priority designed to protect students and taxpayers was reversed under secretary devos. i'm working to codify it so it cannot lay dormant. i want to commend the others provoking with the federal trade commission's to increase interagency collaboration and enforcement actions. so, could you talk to us about the multilevel strategy that needs to be used to hold predatory for-profit
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institutions accountable, and perhaps talk about additional partnerships that you believe will be helpful in this work? >> sure, and again, this is, as you say, a very important development, and it was an important policy change. the business administration had basically blocked states from having any effective role here in overseeing companies that have a significant impact on many, many thousands of people within their states. and it seems to me that we should be working together. none of us has enough people to do all the oversight of these programs that we would like to do and that taxpayers should demand. and we work together and we pool our efforts and our resources, we're going to do a better job. that's what we intend to do here. so it's not that we're trying to get other people to do our work for us. they've got work we want to do. we've got work we need to do. some of that work overlaps.
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and if we can do that together, that's effective. for example, i would say right now we have accounts -- at the previous question asked about this -- transferring from one service to another. we want to make sure that is going smoothly. there are state officials that want to make sure it's going smoothly, as well. some of this overlaps with their area. right now, we have fsa people overseeing this transfer together, with working with officials, state officials from 17 states, i believe, to make sure that it goes as well as possible. with that group of people working together, we'll do better than any of us could alone, and that would be a good process to follow for the federal government of the united states, it seems to me. >> thank you. i have a particular interest in the convergence of for-profit and nonprofit by purchasing or collaborating with nonprofit institutions because we have a situation involving that in north carolina.
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and the gal recently investigated the process through which for-profit institutions convert to nonprofit status. and there are serious shortcomings, including the possibility of insiders taking advantage of nonprofit institutions at student and taxpayer expense through a variety of different creative methods. the gal also found a disparity between the internal revenue service and the department approval. so what steps has the department taken to address the risk of insiders taking advantage of the converted institution in for-profit conversions as part of the change in ownership? and can you talk a little bit also about what information practices and expertise could be shared by the department with the irs in their reviews of such conversions? >> sure. and by the white, the
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information asked by the weight, the information -- information, by the way, has moved forward, and we appreciate those efforts. to the point you made, and it's an insightful question about convergence status of these institutions. let me put it simply. if you are i had financial obligations and we tried to change our name and the court let us change our name, that wouldn't let us get out of our financial obligations. and similarly, if you carry for-profit, things are going to be treated more lightly if they convert to not-for-profit status. that's inappropriate. it is not consistent with the demands we should make on these schools. and we will scrutinize those conversions carefully. and we have the ability to deny them if they are not justified. we have the ability to put conditions on them to make sure taxpayers are protected and make sure students are protected. we will do that. >> thank you. my time has expired.
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i yield back. >> dr. foxx, our ranking member of the committee, welcome. >> thank you, madam chair. the committee has written several letters requesting regard to return to payment has yet to receive responses. however, the committee has received just a few versions from your staff regarding this important issue, made bank statements that have yet to be announced, or false statements regarding the payment clause would expire. [indiscernible] than it does from the coo of fsa. i question rather the transparency is intentional or just incompetence. so i'd like to give you an opportunity to clarify this for
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me on the record. and i need quick answers, please. on what date did the administrative forbearance go into effect, first go into effect? >> you mean the payment pause? is that what i called the payment pause, in march 2020, when the previous administration was in the pandemic? >> just give me the date, please. what date did the administered of forbearance go into effect? >> if you're talking about the payment clause, i'm not sure how you're defining that mr. forbearance, but that the shed minister to forbearance, -- administrative forbearance, but that was march, 2020. >> when was it extended? >> i believe it was extended multiple times under the trump administration. i believe it was november, then again in january. then it was extended under the
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new administration right away in january, and once more. and we have a final deadline of people who return to repayment after january 31, 2022. >> so what did the press release accompanying the announcement, saying that the thing would restart? >> well, i assume, and recall that it correctly stated that this is a final deadline on return of repayment, and the payments would start sometime after january 31, 2022, not before january 31, but anytime after. i don't mean to give you too much detail, but people don't pay on the same day of the month. they are staggered throughout the month, depending on a variety of things that allows us to process payments in a smoother fashion. so it's not the case that everybody will start paying on february 1, but everybody will start repaying after january 31,
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and they will all get notice of their specific eight ahead of time, so they will know that. rep. foxx: on april 3, 2021, we sent a letter regarding the report on this commission, analyzing the true value of student loan portfolios, to which your staff responded with a heavily redacted copy of the requested document. i know you sent the response yesterday. as dr. murphy said in his opening statement, you know that that response did not answer the question. i'm asking again for the unredacted copy. just saying the previous administration redacted it is not an acceptable answer. you have the report. you can share an unredacted copy . the city would work with the committee ensuring what the department has. why is the department hiding this report? mr. cordray: that's a report that predates my time at fsa. rep. foxx: but you have the report. >> that's right.
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rep. foxx: just release it. you have it. what is it? mr. cordray: i will be happy to answer your question. shall i? >> yes. >> so the response to you, which was not from me, but from others at the department, was that this report was released previously, and it was redacted by the previous administration, and you have now released to the report again with the same redacted material that the prior administration provided. and that's our understanding of the appropriate response. if you want to have more follow-up on that -- sounds like you do -- i think the department will be happy to have that discussion with you. i also -- may i just -- may i just -- i'm also told that if you'd like to have a briefing in the issues in that report and the financial underpinnings of it, people would be happy to do that with you. rep. foxx: let me ask my next question. do you believe taxpayers should be aware of the true value of the student loan portfolio? after all, they are the ones
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ultimately on the hook for any unrecovered funds used to finance this program. mr. cordray: again, i think we should all be aware of the accurate numbers about these things. there is some question whether the methodology used in the killer report -- and there have been many other reports over the years -- most accurate. again, people would be happy to brief you on the details of that and hopefully that would help cut through this a bit for you. rep. foxx: mr. cordray, we want the public to know what this is, not just to be briefed on it and not be allowed then to share that information. you have the report, we should have it. if you don't like the methodology, then you explain why the methodology is bad. thank you, madam chair. i yield back. >> thank you, dr. foxx. i'm sure there will be some follow-up on that concern. and now, chairman of the committee, the distinguished chairman, dr. scott. rep. scott: thank you, thank
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you, madam chair, and thank you, mr. cordray, for your hard work in ohio at consumer finance and now at student loans. first question is the fafsa loan was redesigned a couple of years ago, several months ago to over a year ago, and i understand that there are some problems in implementing those changes. it seems to me that we should implement as much of that reform as possible, without delay, because otherwise the students will miss out on benefits, particularly enhanced pell grant awards. can you work with our staff to make sure that as much of that gets implemented as possible, without having to extend the whole program? mr. cordray: yes, can i say a couple things about that?
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and first of all, we appreciate that the acts -- many of you worked hard in congress to get those enacted, and they represent leaps forward in the fafsa form process. it simplifies the form and should make it easier for people to fill it out. it should get more access to federal student aid and a clearer picture for families of what they're getting into, and information sharing with the irs helps us be much more efficient and effective about this. in terms of the current situation, where there's discussions in congress about how to implement that, and when, and which pieces, we are happy to take our governance from you all in the congress on that. we have made it plain that this is a matter of costs for taxpayers and costs for borrowers, about getting this implemented properly, and we want to make sure we do that.
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we've also said, very frankly, that we need more time because we have to replace a 47-year-old mainframe system. rep. scott: if you can work with us to make sure we get as much implemented as possible so students don't miss out on the benefits? mr. cordray: again, we want to make this effective for families and borrowers as quickly as possible. we will do as much as we can as quickly as possible. rep. scott: i have other questions, so i assume you'll be working with your staff to make sure we do that as quickly as possible. congress has given the department of education broad authority to fine institutions that use systems to place imitations on participation and title iv, and to seek recovery of financial losses against owners and executives of such institutions. but the department of education has been failing to do that, leaving the taxpayers and students to pay the price when institutions engage in fraudulent activities that leave students stuck with the bill. in a hearing we had in march, we
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-- i witness said we should use -- in march, a witness said we should use that authority. now let me just say -- use that authority against the owners and executives. i'm not talking about strict liability. i'm talking about triggering that liability when they have personal involvement in the fraud, with consideration for the seriousness of the fraud, and why the executives made of the fraud, taking that into consideration how much they profited. and obviously, if we did that, it would deter future fraud. is that something the department is looking at? mr. cordray: so i will say we have that letter from you. i heard you loud and clear on that. we see eye to eye on this. we absolutely agree more needs to be done to prevent people from abusing these student aid programs, from cheating taxpayers, from cheating students. that's part of why we're setting up the office of enforcement. we look forward to keeping you apprised with our progress dealing with the important issues you raised in that letter.
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i think they're important issues and we agree on the direction here, and i thought it was a good bit of a kick in the behind for us to make sure we are moving down the road on this, and we will. rep. scott: thank you. the next-generation environmental services notice would simplify the direct student loan borrower's access to information through a website. it was devised by the obama administration and kind of left, and not much happened. could you explain the status of that? and i hope you have more to explain than you can in this little time we have left. i want to get in another question, so if you could provide in writing the status of that while i get to another question. mr. cordray: we will provide you in writing. we have a lot of things we're doing, and they are going to make it much better for borrowers. and i'm excited about what our
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team is coming up with. they're doing a great job on this, and we would be happy to give you all the details. rep. scott: and my final question is what authority does the department have things like reducing interest rates, allowing refinancing, and fixing the public service loan forgiveness? have you done a lot of work on that, and we want to thank you on it, but if you could give us -- my time has expired, so you will have to do that as a follow-up, reading is up-to-date on how this is working. another question i'd like would be the $10,000 discharge. how much of that is nonperforming loans? so that discharging wouldn't really cost us anything other than relieving us of the cost of servicing those loans. and whether or not -- what you are doing with the loan services to make sure they are doing
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their jobs as students sign up in january, to make sure they are signing up with an appropriate student aid forgiveness, interest-based repayment and all of those, what kind of guidance you're giving. if you could do that in writing, because obviously i'm over time, and i appreciate the chairwoman's forbearance. mr. cordray: those are good questions, and we will be glad to give you good answers, and then you tell us if you need more. rep. scott: thank you, madam chair. chair: it would be helpful if you presented those questions in writing to mr. cordray's office, so that he can follow up with you in writing. those are questions all of us would like to have answers to. so if the committee would be so kind as to distribute that to all of the members of the subcommittee on higher education and workforce investment, we would certainly appreciate that.
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rep. scott: will do. thank you. rep. wilson:: thank you. now, we want to welcome mr. bowman, the vice chair of this committee. vice chair. rep. bowman: vice president sounds good. thank you, madam chair. [laughter] appreciate the time. mr. cordray, i have a little more airtime for you if you don't mind. thank you so much for joining us today. as you know, i'm a strong advocate for canceling student debt. and i recently joined several colleagues in a letter by representative omar, calling both to president biden and secretary cardona to release the student cancellation memo we were told would be six months ago. the student debt crisis is a racial justice issue. a recent report by the education trust describes has student debt is steeped in systemic racism, and exacerbated by racial inequities in wages, wealth, access to education, and more.
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black borrowers often feel trapped in a vicious cycle of lifelong debt they cannot escape from. and many of them, especially black women, actually face more student debt today than they did when they graduated. the report called this issue "jim crow debt," and highlighted the voices, experiences, and perspectives of black borrowers, which are far too often overlooked in our conversations about the student debt crisis. research has concluded that centering these perspectives in addressing the racial inequities in student debt requires that the federal government cancel all student debt. how is the office of federal student aid actively centering and prioritizing the voices and experiences of black borrowers in your work? and how do you respond to the finding that limiting debt cancellation would harm black borrowers the most?
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mr. cordray: so, i appreciate, rep. bowman, the perspective you laid out in your question. i agree with much of it. and by the way, there is a lot of statistical data that i think supports various pieces of what you have said. one of the ways fsa can be most helpful here is with our operational shop that has access to a great deal of data on federal student aid. you know, all the data, and we use it to effectively manage the program and to the extent that we can provide that information to you or to the department or to the white house, if they are asking for it, we certainly do so. we want to inform the decisions that are made on this as much as possible. again, decisions about general loan forgiveness are not my decisions to make. they will be made elsewhere. we will do our best to implement whatever is done. i do think that loan forgiveness for americans where it's appropriate and justified makes a huge difference in their lives, gives them a chance to
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get sound footing, and move forward and better their lives, rather than being stuck with this millstone around their next. -- necks. and where that is appropriate to do so and there is authority to do so, we will enthusiastically implement that, and i hear you having that same perspective as well. rep. bowman: i appreciate that and would love for my office to be in touch with you so we can get access to some of that data that you mentioned, so we can get a holistic and much better and more comprehensive understanding of the issue. so we would definitely love to work with you on that. i had another question about parent plus loans. i've heard from many of my constituents that depending on how their parent plus loan was structured, they may not have benefited from the pause in payments during the pandemic, and have been struggling to stay out of default all this time. specifically, for the parents of color, the parent plus loan because it comes out of the federal family education loan program, much of which was held
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by private lenders, parent plus loans also faced absurdly high interest rates and exclusions from payment plans. these parents, many of whom have faced hardship and suffering during the pandemic, don't get much attention when we talk about the student debt crisis. but they need our help. they should not have to push off retirement or face financial devastation just because they want to help their kids get an education. is your office considering improvements to parent plus loans? and if so, can you describe your vision for these improvements? mr. cordray: yeah, again, i'll say that the issue of what to do about different types of loans -- as you know, there's a blizzard of different categories that have been developed over many years, and some of it gets to be quite complex. in preparing for this hearing, we went over the issue of parent plus loans, where i understand there is dissatisfaction from from some that didn't get the
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relief that other loans got. there are reasons for that that i don't have time to necessarily get into in detail, but we are open to hearing more from you all about whether parent plus loans should be covered under this program or that program, and having a dialogue back and forth. and we would welcome that, certainly. rep. bowman: so, would you say that your office is just beginning the process of sort of engaging around parent plus loans, and the strengths and weaknesses of them, and all of that? you are not yet considering improvements. you are just trying to get a better understanding of the complex nature of the parent plus loans, as well as other loans? mr. cordray: i'd say that's mostly right, but not entirely. certainly, people thought about parent plus loans when the repayment pause was put in place, and other public service loan forgiveness and the like. and it's always been a bit of a difficult edge of this in terms of what is included, what is not included. but i think there's an openness to further discussions about
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this and trying to think it through. so i don't say we're at the beginning of thinking about it. it's something that's come up various times. but there is openness to hearing more about it. nothing is closed at this point, is my understanding. rep. bowman: thank you so much, madam chair. i yield back. rep. wilson: we would appreciate an answer to that question also in writing because all of us are interested in the parent plus plans. unfortunately, this hearing only gives you five minutes to answer such an important question. mr. cordray: i understand, madam chair. you are piling up the homework for us, but we'll get it back to you as quickly as we can. rep. wilson: that lets you know how important your work is and how important this particular issue impacts so many people, and we appreciate your cooperation. and now, welcome.
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>> thank you, madam chair. appreciate it. and thank you, mr. cordray. i just want to say thank you for your loan commitment to public service, as well. i appreciate that. i have a bill that i introduced back in 2013 that came out of the grassroots of my constituents, refinancing of student loans. as you know, we're kind of historically low-interest rates, yet we have a lot of people paying 6% plus interest rates on old loans. we had introduced a bill to allow people to be able to refinance their student loans at the lowest available current rate. the idea being that would happen in the free market. but somehow, it doesn't happen with student loans. as you know, it's not necessarily easy to do this process. can you think of any reason why that shouldn't be the law of the land, allowing people to be able
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to refinance at the lowest available rate? mr. cordray: so i've heard over the years various proposals along these lines from leaders in the house and the senate, that the interest rates are higher, that maybe they're higher than businesses and developers pay. this interest rates are typically set by statute, as you know. they're going to be modified. they need to be modified by statute. we would be open to providing the kind of technical assistance or other data that we can provide that would be helpful to you in trying to determine what the impact is. but, you know, i would just say, in general, having dealt with financial issues in federal and state government for years and years, it's obvious that higher interest rates make it harder for people to climb out of debt. lower interest rates makes it easier. what's fair and what's appropriate, and the right match to some sort of federal funds rate or something, is for you to determine. but if we can help you by giving you data one way or the other,
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we'd be happy to try to provide that. >> sure, and i don't want to put words in your mouth, but you don't think there's any reason why that would be a problem to do that at this point? mr. cordray: any time you're talking about numbers and dollars, there's a problem. there's either too much or too little. it's up to congress to decide the goldilocks right amount, not for me to decide per se. i may have thoughts about it, but that's not my role here. >> actually, i'm asking you that very question. what are your thoughts? you're allowed to have thoughts, and i would love to hear them. mr. cordray: i'm allowed to have thoughts, but i don't want to get in front of the secretary or the white house or others who have this decision to make. but frankly, in this case, it's you, the congress, that has the decision to make. our interest rates put borrowers in a more difficult position. lower interest rates would make it more feasible for them to pay off their loans. again, that's a very obvious point. i'm not telling you anything that anybody does not know. but in terms of the right level or whether it should be the fed
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funds rate or something else, again, that's a policy decision for you. and if i were in the congress, i would be asking the question and trying to figure out myself, but i don't want to pretend that that's my role. >> i appreciate that, thank you. so let me ask you another question about tuition increase. has the administration discussed that? i know that's one of the issues people seem to have is that the cost of higher education is going up at a faster rate than consumer price index or anything else, and because of that, that's putting undue burden on folks. have you discussed that at all? mr. cordray: that's been true for years. we saw the trajectory when i was at the cfc of cp. it was at that point, for the first time, that our student loan ombudsman was able to point out that the total aggregate student loan debt had just exceeded $1 trillion for the first time.
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and by the way, it's already now somewhere between $1.5 trillions and $1.6 trillion. so in terms of why that's so, whether schools are charging too much, those are policy issues that people wrestle with. if we could keep a lid on higher education costs, that would make it easier to finance this program, and make it easier on borrowers and their families -- all the mechanics that go into that, including state government laws, federal government laws, and what oversight of institutions are. it's not really in my purview to tell institutions how much they can charge students, although obviously we get the backend of that, which is people repaying the loans to pay those amounts. but i would say it's definitely a concern. higher education costs have outpaced inflation. they have risen to very high levels. are we pricing families out of the market? are we doing that by imposing significant debt?
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these are serious issues and worthy of serious consideration, and i urge you to keep pressing on them. rep. pocan: thank you, madam chair. i yield back. rep. wilson: thank you, thank you, mr. pocan. and now, mr. hood of virginia. rep. hood: thank you, madam chair. i'm concerned that the biden administration will continue to freeze student loan payments through 2022. this will settle students with an albatross of debt even further down the road, rather than having them continue to pay down their balances, while heavy-handed government shutdowns have forced unemployment on many americans. we all know there is no longer a labor shortage, or there is now a labor shortage, with 10 million job openings. so there's no justified reason to continue the student loan freeze. mr. cordray, in your past role in the consumer financial protection bureau, you talked a
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lot about predatory lending. today, the federal government itself projects that more than a quarter of all stafford loans will default. i served 17 years in the lending industry, and i can tell you that no business could survive a 25% default rate. it's only the government that would operate with that kind of default rate. and any business would have to quickly close its doors. it certainly wouldn't continue to practice business as usual. however, the government still proceeds with granting loans to millions of borrowers, with few restrictions, knowingly making loans where one in four will default seems the very definition of predatory to me, making loans to unqualified and perhaps unsuspecting borrowers who have no demonstrated ability to repay and they could so easily find themselves caught on the treadmill of automatic annual renewal. it appears that the federal government's policy is let's put our students in as much debt as
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we can, and just have taxpayers fund a massively overpriced and ever expanded budgets of these woke leftist liberal institutions of so-called higher learning. the taxpayer is losing in this. the student is losing in this. and it's only these progressive institutions and these massively increasing exorbitant prices that are laughing all the way to the bank on the back of the taxpayers and the students. mr. cordray, given your documented flip-flopping both opposing and now supporting predatory lending practices, why do you think it's ok to cavalierly lend out taxpayer funds and saddle these students with so much additional debt? mr. cordray: thank you for the question. and what i would say is this. the cost of higher education is high. people need assistance to be able to access that and better their lives and improve their employment prospects for the
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future. and some do that successfully, and some do not. it's a major public policy issue. it's really an issue more for congress to decide. what are the tenets of how we lend to students and their families? and what kind of requirements should be imposed? it's not for me to say. it's for you all to say. and my job is to run the program. by the way, i don't believe i 've changed position on this at all. i believe the issue of federal student loans is important in terms of accessing the ability to improve people's lives. but the ability to repay those loans -- and on the backend, there is a high number of defaults, and we need to keep working and how we can improve these programs. in any event, we can have a debate about the different economic philosophies here that may you and i have, and maybe they are not in full agreement. but beyond that, i'm going to run this program as best i can. i'm going to do it to protect borrowers and students, and i'm
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going to do it to protect taxpayers as much as possible. and i'm happy to have your input to make sure we do it as effectively as possible. rep. good: well, we're certainly not protecting taxpayers. thank you for your answer. we're certainly not protecting taxpayers. the american people are not getting a good investment on their dollar with a 25% default rate. and students are not coming out ahead if they don't have the ability to repay. we are facilitating the rapid inflation on college campuses for, frankly, nonacademic expenses, and there is no end in sight for that. esther cordray, you have a lot of public criticism of your servicing partners, which seems to me to be a bit of blame shifting, especially in public service loan forgiveness and other programs. while that can make for good press to beat up on them, that this habit makes for bad partnerships. you're certainly running a federal program that needs partners. this year alone, four key servicers have ceased the
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relationship there. given your history of predatory lending practices and your refusal of some service partners now to work with you, i don't know how the administration or the american people can expect you to put the students first here. what are you going to do to stop the hemorrhaging of these service partners? mr. cordray: i appreciate the question. and, in fact, as i said, we have servicers, servicing partners, if you will, who have stepped up and are eager to take more of our portfolio, and we have ample capacity to serve the students and borrowers. and we will. and those who are exiting, look, we are putting more performance and accountability into their contracts, and that is not comfortable for everyone. or just over time, people might decide to go in different directions. they're free to make those choices, and they have. we have good servicers we're working with here that we're going to hold accountable to
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-- hold accountable. they have to perform. they understand that. borrowers and taxpayers should demand they perform at a high level. we're going to work with them to do that. if they fail, they're going to be penalized, and that is the way this relationship should be and will be. rep. wilson: your time has expired. rep. good: thank you, madam chair. rep. wilson: representative from new york, welcome. >> thank you, madam chair. my question is regarding discharging student's loans, which is almost impossible under bankruptcy procedures. our students must bring a separate lawsuit within the bankruptcy matter to seek the discharge of their student loans. and the burden of proof in these cases is very, very high, with students required to show that continuing to repay the debt would close a hardship. while there are statutory limitations that can and should be changed, the department can also take steps to reduce the burden for borrowers who are
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already struggling financially, to make it easier for them to secure relief under bankruptcy proceedings. but my question is, is the fsa considering changing how it approaches bankruptcy procedures, changing how it determines which bankruptcies to contest, or by better defining undue hardship standards to reflect the realities faced by student loan borrowers? mr. cordray: excellent question. i appreciate it very much. the way you describe the bankruptcy process and how it applies to student loans is very much the way i understand that process, and i think it does not work well. we think that it needs to be reformed and reevaluated, and we are committed to doing that. i will tell you that there have been discussions already with the justice department. they too are willing to have us review and revise our approach here. we think that that would be that
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-- be better fitted to the realities of life for many people who struggle in bankruptcy and are forced to go into court, if you can imagine such a thing, and recount how miserable their lives are in order to beg for some kind of bankruptcy relief, and rarely get it. we don't think that that's the right place, that this is the right outcome. we are going to review that aggressively and we will have more to say about that, hopefully fairly soon. it is a somewhat complex issue, as bankruptcy always is. and there's different competing considerations here. but we think that there's more we can do to reform that process, and we are committed to doing it, just as you say, for the reasons that you say. rep. espaillat: my next question is that we all know that to help
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borrowers, the biden administration extended the pause in repayments and collections through january 2022 for fed held loans. the administration also extended these protections to the federal family education loan program. however, there are still millions of borrowers who have not received similar protections, including those with private loans. in what ways, if any, has the direct loan program proven effective in providing protection for these borrowers? mr. cordray: so if we're talking -- are we talking about with the secretary announced recently with public service loan forgiveness? >> that's correct. >> so yes, this was an important, a dramatic announcement that reflected a lot of hard work that people did to try to figure out what the flaws had been in the public service loan forgiveness program, sometimes flawed made worse because servicers in the past may have given people wrong information, or people had been confused about whether they had the right to do this and that.
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and it frustrated a lot of people and it caused a lot of people to be denied or discouraged from pursuing relief. the measures that the secretary announced earlier this month are game changing for a lot of those people. and it's going to make a huge difference. there's an awful lot of work to do to make that announcement into reality. we are going to work to do that, and i believe it will bring relief to hundreds of thousands of people who deserve this. again, who are we talking about? we're talking about people who serve this country in uniform, we're talking about police officers and firefighters, people very much affected by the pandemic, who need to get what they deserve under the law and under the program. and we're going to make sure that that happens. but it's an awful lot of work our team is going to have to do. i'm confident they'll do it. they are high performers. they have not complained about the new burdens this puts on
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them. we all understand it's an opportunity to bring pertinent relief and progress to the american people. and what the secretary said is what we're going to do. and we think it's a very good direction to go in. and we are going to do the hard work of making it happen. rep. espaillat: thank you, madam chair, and i yield back. rep. wilson: thank you so much. now, we will hear from the representative from iowa. welcome. i see you walking. miss? some technical difficulty with her. she has frozen. she has frozen. i will go on. >> thank you, madam chair. mr. cordray, i just have a question for you. on march 30, the fsa announced a
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program to somehow under fault some borrowers who had defaulted during the pandemic. now it's pretty clear that probably isn't the law. but setting that aside, i'm also concerned that seven months later, that still hasn't happened, which clearly shows there was not a plan in place to achieve that initially. so, did somebody just hit send on the press release before they had a plan in place, i guess is my question? and i suppose i'm concerned that not only has the department demonstrated its willingness to ignore the law, but it also doesn't have a plan on how it's going to ignore the law. so does the fsa now just release press releases and hope it's all going to work out in the end? that's my question. borrowers are going to sit in limbo for months. so, what's the process for this, sir?
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mr. cordray: so if the question is does fsa write press releases without thinking about the mechanics of carrying out those programs, the answer is no. we don't do that. having said that, i'd be happy to have you frame your question again as to what exactly you would like me to address here in terms of where you are dissatisfied with what we do. >> do they have the mechanics of a program for people who have defaulted on their loans, who can somehow, under fault on those loans, i guess is my question. mr. cordray: ok, so i'm not quite sure. there could be a variety of things you are referring to. there were people who had loans at the beginning of the payment because that were at that time not covered, and later the pause was extended to them, and we had to go to the guarantee agencies and the lenders, and any of them who had defaulted in the meantime needed to be put back
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in the position they would've been had the pause applied to them. if interest had been collected and it was not 0%, that needed to be changed. and there's still a lot of work to do to make that happen. so i'm not sure, beyond that, what you're getting at, but i would be happy to hear more. >> i'll try to rephrase the question, and i will submit it to you, sir. what i would like to do with the balance of my time is yield that to ranking member dr. foxx. rep. foxx: thank you, congresswoman. i'm going to talk about borrower defense. how many borrower defense applications are still pending adjudication? if you don't know the exact number, we'll expect to get an answer tomorrow. mr. cordray: that's fine. we'd be happy to give you exact numbers. what i know is when i came into
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this position, there was a very high number of borrower defense claims that had not been adjudicated, frankly under the last two years. rep. foxx: you can give us that information in the response you give us. mr. cordray: do you want me to give a little more answer here or do you want me to go on to something else? rep. foxx: let me tell you the questions i would like to have answered. how many claims have been adjudicated since the beginning of the biden administration? how many claims have been filed since the beginning of the biden administration? have you set a timeline of goals for how quickly you will clear the backlog? that's one you may be able to answer. mr. cordray: we would be happy to give you detailed responses with more exact numbers, but i will say there have been hundreds of thousands of claims piled up. and we are working down the backlog. however, every time we make a new announcement about some kind of school that's closed or some kind of loan forgiveness, it tends to make more people apply,
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and so this goes up and down with a variety of circumstances. i'm happy to give you exact numbers in response to exact questions from you, and then we won't be jousting about nothing in particular here. rep. foxx: we want to know why it's taking so long for you to get through it. you just indicated that is part of the problem. i haven't heard much about schools closing recently, so that's news to me. mr. cordray: we had several close just recently. and vista schools that really failed you, me, borrowers, and taxpayers all over the country -- didn't do what they were supposed to do. they have closed and left every -- everybody high and dry. rep. foxx: we know from secretary cardona's that people have worked a long time to work swiftly. but shouldn't your announcement
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say the grant of 100% relief make this process go more quickly? and why did you stop updating the data center with information on borrower defense claims, something the previous administration did monthly? mr. cordray: so, we haven't stopped the data center, although i will say these hearings have a salutary effect. and we updated the data center yesterday for the most recent quarter. we expect and plan -- and i think my understanding is that the data center is to be updated quarterly. and it will be updated quarterly on my watch. i can tell you that. when i came in, we were about six months behind. and we are catching up now. we will keep you posted on that. in terms of borrower defense claims, sometimes they're one by one type claims. and those are hard to administer in an effective way. but that's something we're thinking through. as you say, 100% relief will simplify the process somewhat.
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it's still not a simple process. it's still complex in various ways. we'll be glad to give you progress reports on how that's going. rep. foxx: i am glad to hear you say that it's complicated, because that's what the previous administration said and it was condemned when it said that. thank you, madam chair. i apologize for going over. rep. wilson: thank you so much. i don't know whether mr. cordray has another homework assignment or if he cleared that up with the amount of time you had. mr. cordray: i think i do have another homework assignment, and i missed my chance to say earlier, congratulations. i saw that your old school had a big win on the football field, so i'm sure your south carolina colleagues are feeling your overlordship for the time being. rep. wilson: thank you, thank you so much. the representative from new jersey. still with us? welcome. >> thank you, madam chairwoman.
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mr. cordray, this committee has examined the harm that unscrupulous for-profit colleges have inflicted on students, many of whom are students of color, first-generation students, and student veterans. about two weeks ago, i met with the american legion representatives from my district, including the county commander of morris county. they specifically brought up how concerned they were about predatory lending. they're concerned about how for-profit schools are targeting veterans because of their g.i. benefits. and we know that one way the v.a. has attempted to combat bad actors taking advantage of our veterans is through the g.i. bill comparison tool, which tracks complaints and ftc settlements against bad acts of for-profit institutions. but this is only one tool designed to help one targeted group. can you please explain how the federal government and states can better work together to effectively monitor and oversee these institutions? mr. cordray: thank you. it's a great question, and the
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example you gave, which i know is near to your heart, of service members in particular, is a very important constituency. and if there were one we were going to pick out as a priority, that certainly would have one of the best cases to make. and i'm glad to see that some of that has gotten itself in place. and we are doing data matches with dod now. that's something that we can do. and we are getting much more relief to people and we want to get relief to everyone who deserves it. in general, to your question, we can work together with state officials. we want to work together with state officials. under prior policy of the prior administration, they blocked the department and fsa from working with state officials. and frankly, it led to -- what did it lead to? state officials suing the federal government just to get information they thought they needed to oversee these programs. that's not the way we should be working together, and we have stopped that. going forward, where we have complaints -- by the way, states will hear from people.
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we will hear from people. the ftc will hear from people. we need to bring all this together -- cfpb, as well, and talk together and think together about how to solve these problems. that's what we'll do, and i think we will be more effective as a result. we will address these issues through a variety of means. sometimes it will be data matching. sometimes it will be going after high-risk operators that we believe are letting people down. sometimes it will be other things. but we will work closely with our state partners on this rather than pushing them away, and i think that's the right answer. rep. sherrill: thank you. and you went over some of what you were going to do with state actors. are there other actions fsa is planning to take with oversight of the for-profit sector? mr. cordray: yes, and again, you know, some people would say we're targeting the for-profit sector. we're not.
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we are targeting any schools that are not performing as they should, that are violating the law, that are abusing and mistreating students and borrowers and their families, whoever those are. that's who we're going to go after. and we will, and we need to. and people need to see that we're doing that so other schools get the message. that's the way law enforcement works. it has a deterrent effect, and that's important because it brings more people into line. we are going to be working with the federal trade commission. they signed up to work with us, and they will be a very important partner. they have 100 years of history. they know what they're doing. they're eager to take on schools that are violating the law. we will work with them in a strategic way. we will work with states where that's appropriate. we will work with the cfpb where that's appropriate, and the justice department. so that's how we plan to proceed here. i don't know if i quite answered your question. if i didn't, feel free to renew
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it. rep. sherrill: no, i appreciate it. my specific concerns are those bad actors that have been really taking advantage of some of our students. finally, i just wanted to ask -- the american rescue plan included an historic provision to close the $.90 loophole. [laughter] mr. cordray: we didn't go there in response to your last question. rep. sherrill: as a result of the closure of the loophole, for-profit institutions will be required to derive not less than 10% of revenue from sources other than federal systems, and now including the g.i. bill, which i think is important. this will protect the integrity of the $120 billion spent on federal financial aid every year, and guard against the waste of taxpayer dollars. the 90/10 rule will include -- will make sure institutions are not fully reliant on taxpayer programs for financial liability.
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so now that the department's beginning the negotiations to close the loophole, the 90/10 measure will help protect groups that have been part of recruiting by low-quality providers. this will start applying to the fiscal year beginning after january 21, 2023. what steps can the fsa take in the interim? mr. cordray: we will do whatever we can to help bridge the gap between now and when the law takes effect. i will just say i wrote a book about my time in cfpb. the 90/10 loophole was one of the frustrations we experience, and i talked about it in my book. you have now fixed that. thank goodness. good work by the congress. in the meantime, if there is
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things we can do -- i don't know what they may be -- to try to enforce that, even though it is not yet law, we will try to protect taxpayers on that. but it was a terrible loophole that people were driving a truck through, and it was hurting us. and i appreciate congress stepping up and fixing that. it was good work. rep. sherrill: i'm not sure congress gets too many attaboys. so thank you. i will yield back. rep. wilson: thank you so much. ms. miller meeks, are you now ready? representative: thank you. i will try not to go over my time. mr. cordray, as of april 2020, nearly 1.3 million borrowers had their employment certified by the department and were on track to receive public service loan forgiveness. my democratic colleagues would like to say this was a way to reward first responders and frontline workers for their dedication and public service.
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but according to fsa data, the average balance forgiven is approximately $83,000. i'm a 24-year military veteran. so i have no issues and have , used the g.i. bill, and have also instructed people about joining the military when they are in the health care field, utilizing loan forgiveness. but these statistics suggest the graduate degree holders are the vast majority of beneficiaries under this program. now, we certainly want american workers to be educated and to be competitive in the workforce. but this highlights a real concern, where the statute is drafted so broadly that public service employees currently account for 25% of the u.s. workforce. do you have any indication as to what share of the pslf population worked in actual public service like teaching or being a first responder, or doctors at a tribal health care setting or a free medical
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clinic, rather than their own clinic or a not-for-profit that still is highly successful? mr. cordray: let me take several things. first of all, i appreciate what you said early on. as you say, you made use of the g.i. bill. you know the transformational effect it can have on your own life. and the same is true for many of your colleagues around the country. so, we want to make sure that people who are entitled to public service loan forgiveness we want to follow the promise , that was made to them in the law. at the same time, we don't want anybody taking advantage of the program who doesn't really deserve public loan forgiveness. one thing we have to do at fsa is to determine employer eligibility when there is a close call. we will make those calls, with the intent of the law. anybody who's working for the government is entitled to public
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service loan relief. representative: sir, thank you for that. i had asked what share of the population. let me go to my next question. do you believe that a researcher at the brookings institution is doing public service? >> it may depend on exactly what the nature of the job is. i would say generally i would , think no. >> what about a researcher? what about a researcher at the heritage foundation? >> again, generally, i would say no, but maybe they could make a particular case. i'd have to see the case to be persuaded by it. but in general -- >> do that -- do you believe that turning point usa, a 501(c)(3) performs a public service? >> organization so i can't really see what about planned -- >> what about planned parenthood? it's a 501(c)(3). do you believe that taxpayers should be shouldering the costs to forgive the loans of planned parenthood employees? >> not specific to anyone of them there are certain jobs that
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, depending on what people actually do it may be that the , bulk of their time is devoted to actual public service. but it if -- but if it is not then they should not get the , relief. and that's generally how we would approach these issues. >> having left home is 16 as the fourth of eight children, i served as a nurse and physician in the united states army, the former director of the iowa department of public health, a state senator and now u.s. congresswoman. i am not against public service , obviously, and i am not against the pslf. but i am concerned that the eligibility for the program is so vast and so broad that we are using a program intended to incentivize public service, not industries and jobs that ultimately do not fit that definition. can your office commit to providing this committee a breakdown of the pslf borrowers by occupation and by undergraduate and graduate degree? mr. cordray: we'll be glad to if you follow up with the specific
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data request, and i'd guess you just made and we'll try to take one, it down but if you want to convey it in writing so we have the exact particulars we will make sure we get the answer right. we'll provide you with whatever information we have. by the way, it's a fair point you raise. public service loan forgiveness should go to people doing public service. it should not go to people pretending to do public service who are really doing something else. we'll be glad to try to ferret out anybody who's trying to take advantage of the program. at the same time these are very , situational instances that we have to deal with case by case sometimes. although, as i say, everything you described in your background, every bit of that would qualify for public service loan forgiveness. and i hope that you fared reasonably well for the g.i. bill and others because you , deserve it well. representative: thank you for that. i certainly have, as i said, made the request. i hope that you'll fulfill the request and i hope that the information will get to us as soon as possible hopefully no , later than thanksgiving. thank you so much. i yield back my time, madam chair. >> thank you so much.
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and we look forward to the response because all of us are interested in your question. in fact, i have a bill that i'm crafting on public service to look at that also so thank you. , now representative castro has joined us. welcome. representative: thank you, chairwoman. and thank you, mr. cordray, for coming for this committee to discuss these issues relating to federal student aid. under the public service loan forgiveness borrowers who have made 10 years of payments while working certain public service jobs would have their federal student loan balances forgiven in full, as you know. but in 2019, the u.s. government accountability office , the gao, reported that reported the department education had denied 99% of public service loan forgiveness applications. and many public servants were rejected because they received misinformation from their servicer or were enrolled in the
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wrong payment plan among other issues. the department of education recently shared new data about federal student aid programs, including a new report on the pslf program demonstrating the , most borrowers are not yet eligible for forgiveness because they have not been in repayment for 10 years. however, for many of those borrowers, this is due to the fact that they had the wrong type of loan, and as a result, had to consolidate into the direct loan program which caused , their repayment clock to reset and increased their time to reach forgiveness. the federal student aid has recently announced a limited waiver to help borrowers access forgiveness through the pslf program. i wanted to ask you, moving forward, how will the fsa ensure that loan services are equipped to help borrowers access pslf both during the time limited , waiver and into the future, especially given the upcoming return to payment? mr. cordray: thank you. it's a good question and i don't
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mean to refer to my book again . but again, at cfpb, the book i wrote watchdog is about some of the failures that i saw that i wish we could have corrected that we didn't. the 90/10 rule was one. the pslf program was another. as you described very very few , people over the years have gotten any relief under that program. i think it was just a few thousand at the beginning of this year. the changes that are being made here that the secretary announced and due to a lot of hard work by people at the department at fsa are going to result in the numbers of people receiving public service loan forgiveness before the end of this year will be into the tens of thousands and a multiple of , four or five over what was done before. and, we're on the road to hundreds of thousands of others getting their monthly count of how many qualifying months boosted forward and the relief , being made easier for them. those are all things that we're going to do now.
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having said that, that was an announcement. there's a lot of hard work that follows on an announcement that has to be done to make it effective. you know that. you know government very well. it's our job to do that. we have to work with our servicer in this case. they are a public service loan forgiveness. that will be transitioning at some point. they work on this program. they do hard work every day to try to deliver this relief. we are going to be overseeing that to make sure that that's happening and we're going to be working closely together. i want to see this succeed. the secretary wants to see to succeed. i think all of us want to see this succeed, that people who deserve forgiveness based on many years of public service are getting their payment counts proper. they're getting their relief after 10 years and this program will finally deliver what it was supposed to deliver. that's our job here and we're going to do it. representative: can i ask you,
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what were the consequences of any to the services or others involved in administering this program? and the fact that 99% of , applicants were rejected and the program was not working as it was intended? mr. cordray: i can't speak to what may have happened before i came here. but what i can say is, there are some who are rejected outright. there are many who are not rejected, but they're told that they're on their path to it. they may not be nearly as far along that path as they thought they were. and there's been a lot of frustration about that, too. the changes the secretary announced, which are significant, put people much farther forward toward 10 years, pushed at least 20,000 and actually close to 50,000 with a few further changes past 10 years and deserving now and entitled to full relief. and they'll get it. and there are hundreds of thousands who've had their payment count advanced many, many months in some cases. aunt if they consolidate their loans, which is the step they
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need to take if they're pell borrowers, they may actually go all the way from nothing to full forgiveness. we're encouraging everyone to do that to help us encourage everyone to do. representative: let me just make one more point. mr. cordray sorry. representative: i just want to be sure that there was no that there wasn't some malfeasance there, that somebody wasn't trying to make money off of a scheme. mr. cordray yeah. actually, i'll say two more things if i may. number one, we are concerned about that. that's why one of the pieces that the secretary announced is a redetermination program for people who might have applied before and been rejected, that they can reapply and that they should seek reconsideration. so, we want to correct those errors where possible. the other is, there are scams and frauds to develop around these programs. it's true of everything in government. there's something we're doing that's good for people. there are scammers and fraudsters who will try to get into it. use it as a way to get people's personal information and so
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forth. we try to fight that as much as we can. but in terms of the actual program we will give people a chance to have reconsideration here. representative: i have to yield back. the chairwoman is cutting me off. chair: this is a very, very interesting meeting. so you can see why we keep going , over time, because so many questions and so many concerns. i told you before the meeting started how impactful this was going to be. but we appreciate your cooperation. representative: you warned me very, very clearly. yes. chair: i don't know if mr. castro wants anything in writing. you were fine with your responses. representative: yes. if there's anything else in writing, anything else left to answer all those questions if you could put them in writing? thank you. chair: thank you.
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next, representative comer of kentucky. representative: thank you, madam chair. mr. cordray, i'm sure you're very aware that ranking member fox and i along with several of our colleagues on the house oversight committee sent a letter to secretary cardona in july requesting the release of a report commissioned by former secretary devos detailing budget projections and information related to the value of the federal government's entire student loan portfolio. this letter followed several requests. we invoke the statutory seven member rule requiring executive branch agencies to produce documents when seven members from the oversight committee made the request. this member rule is just started this year. this was the result of a lawsuit
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by elijah cummings and the minority at that time the minority democrats on the oversight committee because they were having difficulty getting information from the trump administration. >> so now, there's a process for the minority to get documentation from the executive branch if they refuse to comply with our requests. it is called the seven-member rule. we invoked the seven-member rule. we've only done that a couple of times this congress, yet the department of education refused to respond with the appropriate documents. so we went and we sent another , follow up letter two weeks ago. again, i have received no response from the department. mr. cordray, this information will be very useful in determining the scope of student loan debt we're discussing in this hearing today and the debt american students are living with every day. i encourage you to work with your colleagues to provide this information to the oversight committee as soon as possible. and i might remind you that ranking member foxx is also a very active member on the house oversight committee. is that a reasonable request?
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mr. cordray: again, ranking member foxx asked me about that same report i believe earlier in the hearing. i'll simply give you the same answer i gave her which is what , i know on the subject, which is that -- by the way, if you haven't received a response on that, i believe one is forthcoming. you should get it immediately. and again, these hearings do have a way of kind of pushing forward the work for us. it's just the nature of life, i guess. but let me just say, what i understand is that the report had been provided in a redacted form. the redactions were imposed by the previous administration. it's been looked at and it's thought that that was, again, an appropriate response. i think it's again being provided in the same redacted form. and there's some concern about some of the metrics in that report that we think are not accurate, and we are offering the department is offering to
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, provide a briefing to everybody who is interested in the subject of that report to go through it in some detail. if that is helpful to you, it might be worth doing that, and then see if you're satisfied and if you're not, you can follow up at that point. but i think that's what would be responsive to your question. representative: when you ask any member of congress whether they're republican or democrats. and there's a big difference between the republicans and democrats from an ideological standpoint up here. i think every american sees that. if you name the biggest 20 to 25 biggest issues that affect people in your district, student loan debt, it is going to be on just about every member's list of 25 issues. it shouldn't be this hard to get information to help us determine the extent of the student loan debt. it's been a frustrating process. i hope that from this point on , the department of education will comply with the house oversight committee's simple request for information.
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let me switch gears and to that recently the department of , education began the negotiated rulemaking process to make changes once again to the borrower defense regulations. in the highly irregular move, the department announced that it planned to retroactively change the borrower defense rules for all federal student loans, applying new regulations to borrowers whose claims have already been adjudicated. retroactively in law is highly respected. the supreme court precedent is quite clear that rules should not be retroactive unless authorized explicitly by congress. the biden administration's proposal runs counter to this settled area of the law and retroactivity without an authorization evident in the higher education act permitting the department to establish retroactive rules. even the obama administration's borrower defensible did not attempt to make such an extraordinary change. mr. cordray, if hta does not
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authorize such actions what , authority does the department have to make retroactive changes to the borrower defense regulations? mr. cordray: i have got about five seconds and that's about a 10-minute answer. -- 10-minute answer i need to give you. so, i don't know if you're going to need that one in writing or just watch, but what i will say is i know the borrower defense , program is very complicated. there have been three or four changes in direction by different either rule makings or policy differences under the prior administrations. one of the things i know is that that's one of the issues that's going to be taken up and negotiated rulemaking process which would be a very public process. i'm not running that process, but we have input into it, everybody will have input into it. we're happy to have your input into it and get that rule into the right position. and we will work to do that. in general though, in terms of the zig and zag in this, that there has been in the past, you're absolutely right about that. we can give you chapter and
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verse on that but would probably be better to do that in writing if you will uh look forward to receiving that. >> thank you. >> more homework. -- chair: thank you so much, representative courtney, how are you in connecticut? representative: i'm good. thank you, madam. chair and thank you mr cordray for being here today. -- and thank you, mr. cordray, for being here today. i agree with your earlier testimony that secretary cardona's decision on october 6 to untangle the public service loan program is very significant and powerful decision that will help hundreds of thousands of student loan borrowers. i think probably every member got frustrated constituents calling over the last three years about the fact that the department of education and the loan servicers were just -- you know, really arbitrarily denying their 10 years of hard work in terms of complying with the program. i was here back in 2007 when the college cost reduction act was
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passed that created the public service loan forgiveness program. i think it's important remember it had strong bipartisan support and was signed into law by george w. bush. again, i think if there's a consensus area in terms of student loan relief, certainly people who either wear the uniform of this country or step up as cops or teachers, nurses, etc. in public service jobs who are earning their discharge is something that we should all pull together and work hard to implement. particularly i want to again note that, you know, we're already hearing from constituents that have gotten the good news in terms of emails from the department. so it's happening in real time, where people are getting the good news that payments are being recognized and moving up their discharge date. the fact that, again, people who are in the military are also going to have their time overseas counted under, you know, the deferred payments that occurred when they're overseas are going to be counted as qualifying payments. again, i just want to confirm that that's something that's going to be implemented by the department of education in
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conjunction with dod, so it's really going to be done internally in terms of an administrative function, is that correct? mr. cordray: yeah. we have worked hard to get automated data matching with dod. by the way, we're trying to get it across the federal government through office of personnel management. we think we will, it takes a little time to do some of these things but yes, we are going to make it as easy as possible. and we also would like to work with states and local governments as well. maybe you and your staff could help us with that, some outreach on that and so forth. , we want everybody who is entitled to the benefits of this under the law to get the benefits of this. and by the way, every day i work with people here at fsa and the department, they're all public servants, too, as you know, i'm really proud of the work they're doing. some days, you're especially proud because really good work has gotten done. the day of that announcement about public service loan
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forgiveness was the day i was especially proud of the people at fsa. representative: again, just on that point, you know, this committee reported out as part of the build back better act a provision to clean up the problem with the military service members. again, the secretary's order kind of obviated the need to include that into the pbd when we do final passage. i want to, again, thank your staff who helped work with committee staff in terms of fashioning the language. again, clearly the commitment was there within your agency. the other part of the secretary's order -- i have a question. i feel it is just really important. i want to get through this. some people, as congressman castro alluded, will have to file a waiver request to get the consolidation relief, which the secretary's order included. we're already hearing from constituents that servicers who are getting calls because i mean this is something people are
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watching like a hawk back home are already being told they don't have the guidance to implement the pslf changes. again, we want to make sure because there's a deadline here october of next year for people to file these requests what , steps fsa is going to take. we want to be partners with you to get the word out to people in terms of making sure that they don't get caught in another sort of bureaucratic gymnastic that would affect their eligibility for discharge. mr. cordray: yeah, it's a very fair question. and by the way, we're operating in real time here. it's been a matter of days since the secretary's announcement. and we want to make sure that people have the right guidance here. and sometimes quick as the enemy of the good, but we're working on that. we will work with the servicer, which is fia, to make sure that they have the guidance to provide to people. we've heard some of the same things you've heard and we want to get these things sorted out as quickly as possible. but we do intend, we will deliver on the announcement that was made and get relief to people and we will communicate
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closely with them going forward. and by the way, if you hear things, pez them onto us because , we're probably hearing the same things. but if we aren't, we want to hear from you too. representative: when you have a form developed for the waiver application, i mean please share that with member offices because that is, obviously, that's the tangible document that is going to trigger relief for folks. again, i definitely want to work with you. one last point. mr. popkin talked about the refinance issue. again, i've introduced a bill to actually track the federal reserve benchmark and allow people to refinance down. so, there already is something actively in the hopper. with this congress, the 117th congress, to go that route. and i look forward to hopefully working with the secretary in your office to to, you know, provide something, you know, that is screamingly obvious, which is that people should be able to refinance their debt with student loans, just like you do with a home mortgage or other forms of consumer debt. mr. cordray: i understand your point on that and whatever you do, we will be glad to
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implement. representative: thank you, sir. i yield back. chair: thank you so much. representative law. representative: thank you. and mr. cordray, thank you for taking the time to testify before the committee today. as you know, the pandemic brought on many challenges, especially for students and borrowers. congress provided a temporary pause on federal student loan repayments. the cares act provided the secretary of education authority to suspend all interest accumulation and monthly payments on federally-held loans through september 30, 2020. additional executive action extended the repayment paused by the previous and current administrations. however, most recently, the biden administration has extended repayment one final time until january 31, 2022. unfortunately, to date, neither the department nor fsa has made public a comprehensive plan for returning borrowers into repayment status. the repayment date is just around the corner and this lack
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of clarity is unhelpful to the 45 million borrowers. these individuals need to have an explicit understanding on all requirements and expectations when the payment suspensions end. in fact, law requires borrowers to receive no less than six notices when normal payment obligations are about to resume. additionally, this uncertainty has made it difficult for loan collection agencies to have adequate time to plan and hire employees. as many businesses, these agencies had to let people go during the pandemic. now, loan collection agencies will be expected to resume their business as usual and meet the same collection requirements for the department as soon as repayment begins again. these agencies need time to ensure they have employees hired and trained so they can deliver on the department's and borrowers' expectations. loan rehabilitation has been a key tool toist borrowers. in fact, congress recognized the value of this tool and it was included as a provision in the cares act.
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why did the fsa decide that private collection agencies should not proactively explain the benefits of loan rehab to borrowers? mr. cordray: i think you have accurately and admirably described the challenges here of the multiple extensions of the repayment pause and now, the moving to a final deadline. what i'll say is, in terms of a communications plan, we have extensive communications plans that we are already activating and operating under. we have been for the last couple of months. another we know this is the final deadline, we're reaching out to tens of millions of borrowers here and they will get the required, as you noted correctly, at least six communications from us on this subject. that's what congress said we should do. and it will be more than six in many cases. some of those communications are coming directly from us. some of them will be coming from their servicers. we will have input into what
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those communications are just to , make sure the message isn't getting mixed here. we're also working and be awfully glad to work with you and your offices to make sure the message gets out that way as well. some of them will listen to fsa. some of them may listen to their services. some of them will listen to neither of those, but they will listen to you. your voice is respected in your community and other community groups and others, whether it's alumni associations or student associations or teachers associations or anybody can help us get this message out. we don't want anybody to mistake this, fall into delinquency default because they just didn't understand this was happening. they just didn't hear about it. our job is to get this a blanket communication across the country. but all of you can help us do that and we would appreciate it. ,now i can go into more detail , on more plans. representative: i have one follow up to that. i appreciate that. i would like to follow-up.
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there are 11 private collection agencies, pcas, on contract with the department. and it's my understanding the pcs are at the ready to assist borrowers with rehabilitation when return to loan payment repayment begins. will fsa allow pcas to begin calls to defaulted borrowers on february 1, 2022? mr. cordray: in terms of what's going to happen with defaulted borrowers, there are active consideration, active consideration being given to that. there's various schools of thought as to what the pandemic pause has meant for defaulted borrowers. as you know, the pcas that you're talking about have not been able to engage in collection activity, for the most part during the repayment pause because there's been no debt to collect because it's all been paused. right? so that's that's been a difficult situation for them. we understand and coming out of this depending on decisions that are made after january 31. it's a difficult situation. we will communicate with people
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as we can. that is the pca's. we want to make sure we have plenty of capacity for reaching borrowers to make sure that they get this message and that they don't misunderstand it or fail to hear it. so, i agree with you. that is a prime consideration for us and we're working hard to do that. representative: thank you. i yield back. chair: thank you so much. >> thank you. thank you, mr. cordray. i agree with my colleagues who have noted the importance of this issue. a recent estimate from the federal reserve found that americans owe more than $1.7 trillion in student loan debt. and in my home state of oregon, the average graduate has more than $27,000 in debt. so it's clear we need to work together to find the best policies to support student borrowers. mr. cordray: we know of the loan servicers that have announced that they do not plan to renew their contracts. these three companies serve about 16 million borrowers.
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so, i want to ask about how the nonrenewal of these contracts is going to affect borrowers and their families. how will the department let borrowers know if they are supposed to be changing, and how can congress help you make this transition as easy and cost effective as possible for borrowers, their families and for taxpayers? mr. cordray: thank you for the question. and the numbers you cited i believe are pretty much accurate, in fact are accurate. , what i will say is there have been times in the past as i understand it and its history for me -- i'm new to the job -- that fsa hasn't always handled transfer of accounts well and the servicers haven't transferred the accounts well, and there's been problems for borrowers. most of the more recent examples have been smaller universes of borrowers, but those have been handled better and the communication plans are sounder and the handoff is better. and by the way, here the
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handoffs are being overseen very closely, and the servicers know that, by a coalition of overseers including 17 states. that gives me more confidence. but at the same time, you know, we need to make this work. the way we do it is, we start by transferring a small cohort of borrowers and make sure that we work the kinks out on that. then we gradually move to larger cohorts of borrowers. that is well in process right now for the granite state portfolio, the naviant portfolio is going to be handled. we think more easily because it's it's a move directly from one service or to another of the entire accounts all on the same platform. but we'll see and we'll make sure that that's done well. the fia transfers are a little more complex because they're so big they have to go to multiple recipients servers, not everybody on the same platform. so we will be bulldogging that to make sure that that goes as well as we can. representative: i want to get to
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another issue but i know we'll , be following up on that to see how it's going throughout the process. mr. cordray: fair enough. representative: the department of education basically to provide targeted forms of loan relief including people total and permanent disability. those discharges to borrowers without requiring them to go through a process. i've been a longtime supporter of helping borrowers with permanent disability. and in fact i included some , protections in my simple act which will work to get more , borrowers into income-driven repayment plans by automating the annual process of recertifying borrower's income. similar provisions to this simple act were included in the future act, which as you know was signed into law last congress. and even though income driven
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repayment is not a one size fits all solution it's a very , effective tool. so how can automatic processes remove major barriers for borrowers and get them the benefits they're entitled to under the law. and are there additional programs including automatically updating income income for borrowers on idr plans that you would like to see automated in a similar way that will help streamline? mr. cordray: an excellent question. and i would say significant work in progress on all of the fronts you mentioned. number one, the total and permanent disability announcement recently. that is good vastly being automated and the relief is being delivered to people and it's significant numbers of people. as you said, 700,000 people. so that's an example of how we're starting to do this work better. the irs relationship with fsa has has really made progress over the last year or so. and there are ways that they can help us automate some of this, including, as you say, income-driven repayment. we want that to be as easy as possible for borrowers. frankly every borrower of student loans who is now repaying student loans we want as much as possibly in one of two plans. either on an auto debit if they're able to stay current and able to make those payments. say they don't -- so they don't
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forget, they don't screw up, it is just regular routine, the way you automatically debit an account for expected amount, no surprises. that's what we want. and we're pushing people to make sure that they get in that as much as possible. if they're having trouble making their payments or if they're going to struggle to make their payments, we want them to be on income-driven repayment. that's the right answer. it allows them to lower their monthly payment to an appropriate amount and then going forward we can continue to adjust it to their circumstances year in and year out. that's a big deal for us. we're trying to make that simpler for people and we want everybody out there and help us spread the word among your constituents. if you're able to make your payments easily, get on auto debit. if you're having trouble making payments, get on income-driven repayment. and the process should be easier now than it was before, and don't take no for an answer on that. representative: i appreciate that. when we were working on the simple act and this is over the last several years we found that there were many students who
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just did not meet that strict deadline in -- deadline on updating their income payment. and then, they'd to be in default and then it was harder , to get them out. so streamlining that process and , automating it. i think it's been a tremendous help. i want to align myself with the colleagues who have asked about the challenges with the public service sponsors of this program will look for working with you on that. thank you, madam chair. i yield back. chair: mr. keller, welcome to our committee. representative: thank you, madam chair. mr. cordray, several fsa contractors have exited the federal student loan servicing industry since the beginning of this year. as a result, over 16 million borrowers will be placed with a new servicer at the same time they returned to repayment status after nearly a two-year pause. as you've noted, the return to repayment was challenging, a challenging task. it was a challenging task even without losing any service.
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among the services that have announced their exit was the pennsylvania higher education assistance agency. this is an entity that does a tremendous work in pennsylvania and has received some unfair criticism from congressional democrats, progressive advocates and sometimes quite frankly, your department. you've repeatedly noted and allude to it in your testimony that the reason some servicers made the decision not to renew or extend their contracts was that they were either unable or unwilling to meet our supposed increased accountability and performance metrics. for example, speaking at a conference in september attended by several fsa stakeholders, you noted that not everybody was thrilled with the new standards, but fsa stuck to its guns and some of the servicers decided to exit the program rather than content with these new realities. does that include fia?
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mr. cordray: i'm not trying to -- representative: does it include fia or doesn't it? i only have five minutes. yes or no? mr. cordray: they are exiting our program. they have reasons of their own for exiting. they have freedom of choice here, they've decided to exit. representative: i can't have a filibuster. i have got to keep moving. so you have talked to fia about what they decided? yes or no? representative: i have a conversations with fia leadership, yes. representative: the contract extension for the remaining servicers, these are guidelines. were the servicers made aware of
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these new guidelines on september 24 of this year? mr. cordray: actually, they were made aware of those guidelines sooner because we had to negotiate the contracts and it took more than two months of hard work. representative: what date were they made aware? mr. cordray: i think my very first conversation with loan service leaders including fia i would have made plain that this was what we intended. representative: can i say something? i would like to know what date that was. mr. cordray: i don't know what date that was. representative: can you get that date? mr. cordray: it was early. let me say in context here loan , servicing is a hard job. i know it's a hard job and i'll say this to you, and i will say it to fia, and i'll say it to all the loan servicers. i've seen mortgage loan servicing as head of cpb. it's a very hard job.
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having said that, we need to do a good job and we have to have performance and accountability metrics in these contracts and people have to meet him. representative: i am going to disagree. i'm going to take my time back. i'm not going to disagree with that. we need to have transparency and we need to make sure everybody understands what they're doing and they have to provide a good job. i know fia does in pennsylvania because they service all all of pennsylvania. but for people to make accusations that fia is doing that because they don't want accountability, it's not fair. i'd like to know and i'd like to know when you can provide me with a date you talked to fia? representative: -- mr. cordray: i don't know exactly what the situation here is on a request like this. but if you're asking for a specific question about a factual date, i believe we can provide it. representative: ok. mr. cordray: i would expect -- representative: sir -- my time.
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i would expect that by friday of this week you can provide my , staff or the committee with the date in which you made fia aware of what the guidelines would be. i would just like to know that. because that goes to the timeline of when they decided did not decide to continue the contract here. again, it's all about accountability. and i've heard a lot of discussions today regarding student loans and educational institutions. in fact, the secretary cardona said a couple months ago that everybody should be treated the same as far as educational institutions regardless of their tax status. i'm still waiting for his plan on holding everybody the same metrics. mr. cordray: let me let me add something that may complicate your question. you asked when did i tell fia something. when i first came into his head of fsa on may 4 and started speaking publicly about my job, i started talking about accountability and performance and so that was in the air. whether i had said it directly to phia on the phone or whether i said it generally and they heard it, everybody began hearing that after i became the head of fsa. that was not a message that was
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hidden or somehow sugarcoated. that was part of what we expected. representative: sir, here's a little bit of accountability that you and the department can provide. i want another date when they were made aware and i also want to see the secretary's plan when he agreed that everybody should be treated the same. here's accountability for you guys, ok? i want to see the plan. i want to see the plan to treat everybody the same from the department of education. representative: whatever you're expecting or requiring or demanding if you just put us in , writing to us and we'll try to respond to you in writing, be happy to do that. representative: you either do something or you don't. i will submit to you my request in writing. mr. cordray: again, as so when fia would have learned something, i have been talking -- as to when phia would have learned something, i have been talking about this from the first day on the job, they probably -- representative: no, sir.
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let's not dodge the question. there was a date when they were given the expectations. ok? chair: time. representative: thank you, sir. chair: thank you, madam chair, and thank you, mr. cordray for being here. somebody kicked the hornet's nest here. that's i think obvious based on the question in the back and forth that's going on today. i think what's been exposed by the pause is that we have a system that is flawed. and whether it's a "60 minutes" story or certainly secondary stories about parent plus loans, you know i think we're kind of , in a territory where this is not going away. and i think it's something that's going to grow as we try and tackle the very complex issues of bringing people back online after they have been not making these payments, obviously, for some time. and it is only going to get worse, i think with the
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, extension of that. my question is, and we have, you know, we have another freshman class that that's attending college throughout this nation. so, are there things that are being changed beyond just the order that's already been offered when it comes to the entire student loan system? and i want to go back to the parent plus loans a little bit because that has been one of, i think, the most frustrating parts of this entire program in that what you have is, you know, it was just just a specific -- it was just a specific story recounted in "the wall street journal" were a woman had two children that went through baylor university and she ends up with over $200,000 in student loans under her name, under a parent plus loan and no ability
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to pay it back and you just scratch your head. how could this possibly happen? i think part of it is that the universities continue to increase tuition, not really concerned about whether or not there is a collateral involved or whether or not it can be paid back. and it just becomes more and more complex. so, although the thing that will not go away -- and our constituents -- it doesn't matter what side of the aisle you are on -- are now completely engulfed in, how do i do this? how do i get my loan forgiveness in place? where are we now? how can we deal with the issues before us when it comes to new students as well as the repayment plans? mr. cordray: there was a lot there. in general, i agree with you. it's an unusual form of lending that we do with student loans in this country, where it is not risk-based as most private sector lending is. and that does lead to some difficulties down the road. having said that, you know, the
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student loan programs, as i understand it, and again, congress has designed these programs and put them in place, it's meant to strengthen this country by giving more access on a more evenhanded basis to higher education and what that means for improving people's prospects in life, their economic prospects and the like. however, there are challenges in this program, no doubt about it. there's challenges in ensuring that loans are repaid and making sure that's done on an evenhanded basis. there's challenges in making sure that schools are providing value for the money, and i think we have an obligation to have effective oversight there. and i don't know if i'm answering your specific question or not, but if i'm not feel free to reframe it. but that's my reaction to your -- to what you had to say. representative: yeah, i think representative castro kind of touched on it. you know it borders on
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, malfeasance and i'm really worried about that part of this. that if there's predatory loans being made, that if there are sequences within the program where there absolutely is is some other type of motive involved, i'm really concerned about that because i think that's what the pause exposed. it exposed a system that quite , honestly, i think many people are standing back and saying, listen, this is just not about loan forgiveness. this is about holding people accountable. and it's very shady. i mean, this is starting to feel like something that quite honestly deserves a lot more scrutiny than it has been receiving in the past. mr. cordray: we will do our best to hold people accountable. maybe schools in some instance, maybe servicers some instance, maybe borrowers in some instance. and we'll be happy to have more input from you as to how we can best do that as we go. it's not an easy job, no question, but it's an important
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job and we'll try to do it. representative: thank you, madam chair. i yield back. thank you. chair: thank you. thank you so much. i remind my colleagues that , pursuant to committee practice, materials for submission for the hearing record must be submitted to the committee clerk within 14 days following the last day of the hearing. so, by close of business on 10 november 2021, preferably in microsoft word format. the materials submitted must address the subject matter of the hearing. only a member of the subcommittee or an invited witness may submit materials for inclusion in the hearing record. documents are limited to 50 pages each. documents longer than 50 pages will be incorporated into the
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record by way of an internet link that you must provide to the committee clerk within the required timeframe. but please recognize that in the future the link may no longer , work. pursuant to house rules and regulations, items for the record should be submitted to the clerk electronically by edand . -- to the clerk electronically by edand labor.hearings@mail.house.gov again, i want to thank our witness for his art dedication today for his participation. we learned so much and we look forward to working with you. i told you this was an issue that was impacting america and i guess you found out from testifying here today. mr. cordray: i guess i did, yes. chair: members of the subcommittee may have additional questions for you and they will submit those in writing to you. we ask the witness to please respond to those questions in writing. the hearing record will be held
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open for 14 days in order to receive those responses. i remind my colleagues that , pursuant to committee practice witness questions for the , hearing record must be submitted to the majority committee staff or committee clerk within seven days. the questions submitted must address the subject matter of the hearing. i now recognize the distinguished ranking member, dr. murphy for closing , statement. dr. murphy. representative: thank you, madam chairman, and thank you for holding this meeting. and thank you, mr. cordray, for participating today. i just want to make a few points as we close up. i appreciate all the effort put into this today. but to be very honest with you, a little disappointed in some of the responses made by the witness. there was a lot of deflection , saying that was for "congress to decide." you know, on many issues,
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congress has already decided. we had kind of a giant truck driven through the statute using authority that everyone knows was never intended for the purpose. as i said in my opening statement, the department of education and quite frankly yourself have been less than transparent, to put it bluntly. i mean, that's just the fact we hoped you would be more prepared to answer the questions that this committee proposed because largely there the same questions we sent in our letters months ago and didn't get very valid responses. unfortunately, a lack of answers it is somewhat par for the , course for this administration. there seems to not be consistent measures of moving forward and answering specific questions for accountability. i want to reiterate, as the chairwoman just said that we , want, we expect answers to the questions given to you, ones you said you were going to provide. thank you but time regardless for your testimony, we look forward to the answers that this
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committee has asked you put back in writing to the members who submitted them. thank you, madam chairman. i will yield back. chair: thank you. i now recognize myself for the purpose of making my closing statement. thank you, mr. cordray, for your time and your work to support students and protect borrows. today we discussed the major steps the biden/harris administration has taken to support federal student loan borrowers. in just nine months, the administration has provided 563,000 borrowers with $9.5 billion in relief they were legally entitled to receive under the higher education act. and as mr. cordray shared, the education department continues to develop stronger consumer protections for students and for taxpayers. while the department's progress has been encouraging, the approaching restart of student
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loan requirements, and the longer-term shift to next gen, poses major challenges for fsa. student borrows and servicers need clear guidance to ensure the transition back to the repayment goes smoothly and the next again -- and the next gen fulfills the promise of a simpler, more consumer-friendly student loan system. i look forward to our work ahead to ensure all student borrowers receive the support they need. thank you again, mr. cordray, for your leadership and commitment to supporting students and their families. if there's no further business, without objection, the subcommittee stands adjourned. thank you. >> c-span is your unfiltered
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at the federal reserve. jay has ruben the independence i value in the fed chair. in the last administration, he stood up to unprecedented -- and maintain the credibility of this institution. it is one of many reasons jay has support from across the political spectrum. in 2018, he was confirmed with 84 votes in the u.s. senate. his approach is fed chair earned the support and respect of groups of the afl-cio to the business roundtable, which brings me to one more table i have -- which brings me to one more reason i have chosen to nominate jay. having fed leadership with broad, bipartisan support is important, especially now in such a politically-divided nation. we need to do everything we can to take the bitter partisanship of today's politics out of something as important as the independence and credibility of
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the federal reserve. this is vital to maintaining a put trust in an independent institution like the federal reserve. ♪ >> american history tv, saturdays on c-span2. explore the people and events that tell the american story. at 11:00 a.m. eastern on lectures in history, an exploration of how pilgrims became part of the united states ' founding story in 19th century history textbooks. at 1:00 p.m., president nixon's senior must policy advisor gives a behind-the-scenes view of the president's domestic agenda which include guaranteed family income, health insurance programs and support for children's nutrition. watch the weddings of to first adopters. president lyndon johnson's dr. mary's a marine captain on
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december 9, 1967. then, president nixon's dr. trisha mary's edward cox june 12, 1971, in the first rose garden wedding. >> mr. gorbachev, tear down this wall. >> at 5:25 p.m., the ronald reagan presidential foundation and institution posts a look at the evolution of president reagan's "tear down this wall" speech and it's important. the white house speechwriter behind the address, peter robinson, participates in the event. watch american history tv saturday on c-span2 and find a schedule on your program guide or watch online, any at c-span.org/history. ♪ >> book tv, every sunday on c-span2, features leading
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authors discussing nonfiction books. at 2:00 p.m. eastern, hillary clinton and a mystery writer discuss their international thriller, "state of terror." at 6:30, a university of illinois journalism professor officer thoughts on challenges for journalism on her book, "news for the rich, white and blue." on about books, former new york democratic congressman steve israel's thoughts on opening a new bookstore. plus other news from the publishing world. and at 10:00 p.m. on afterwards, in his latest book, the author argues corporate america is focused on increased profits. he is interviewed by the former chair of the president's council of economic advisers during the george w. bush administration.
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book tv every sunday on c-span2. and find a full schedule on your program guide or watch online anytime at book tv.org. ♪ >> consumer advocates testified about scams targeting the elderly during the covid-19 pandemic come up before the senate special committee on aging. witnesses including one scam survivor talked about how criminals are taking advantage of older people who may be more isolated during the pandemic. this is about 90 minutes. [gavel striking block] >> good morning, everyone. the senate special committee on aging will come to order. today, the committee convene

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