Institutions subcommittee will get underway with a hearing that will look at the impact of high student Loan Interest rates and debt and the impact on the economy. Among those testifying today, the Financial Aid director a washington dc teacher will testify and others as well. At the subcommittees chairman will introduce legislation that would allow individuals without Student Loans to refinance at a lower Interest Rate being offered to new borrowers. This comes as fox business reports the numbers are startling. 1. 11 trillion in Student Loans outstanding. Of two toulon hearings we are covering today on the cspan network. The Senate BudgetCommittee Debt and you can call that getting underway right about now online at cspan. Org. Thank you all for joining us. One decade ago, we begin to see the warning signs of problems in the housing market. A few years later, we watched accommodation of wall street greed and attentive regulators inattentive regulators helping to destroy our economy. This crisis, the topic of today todays hearing. Here we are again third outstanding student debt is 1. 2 trillion. More than credit card debt, auto loans. Roughly 7 million borrowers are in default on a student loan with these borrowers lose, our economy loses. A 13, the Consumer FinancialProtection Bureau released a report describing the impact of heavy student loan burdens. Joined them in describing how celebs can interrupt the slowly recovering economy. Excessive student debt can defer or destroy the dreams of prospective firsttime homebuyers. And limit the options of young graduates who might work as teachers or doctors in underserved areas. Defaults will have longterm impacts on a recovery. Its critical we ensure that student loan servicers do their jobs properly to protect individual borrowers and our economy as a whole. Last year, i wrote a letter to some of the largest banks and Student Loans companies asking about their efforts to modify loans for borrowers in trouble. Measuring their success and then rolling forwards and affordable incomebased plans. The numbers were dismal. No bank has enrolled more than of borrowers were in trouble. Im concerned that student loan servicers care more about maximizing profits than giving proper customer service. Thatf the questions considers the retirement system set up to make borrowers fail. Our servicers our servicers ensuring that you understand their full range of rePayment Options . Many of the loan rePayment Options are better suited for contract lawyers and recent graduates. We dont give graduates the tools to succeed, we can expect them to have a fair shot at building a successful life. How can borrowers understand the rePayment Options best suited to their specific needs when only legalways that experts can understand . I propose a student loan option within the cfp be. Within the cfpb. That office has issued reports describing trouble and practices. A borrowers payments in order to maximize fees. Facing challenges activating the relative benefits on the relative benefits on their Student Loans. All borrowers facing options obstacles and rolling in the modification programs. Come at fdicrrals founded the nations largest servicer broker in a series of laws. Its been ordered to pay fines and compensation of more than 90 million. It revealed it wash also under investigation. Cfp be reports have recommended that Congress Examine some of the reforms to the credit card and Mortgage Servicing markets such as ones related to Payment Processing and servicing transfers third in order to approve the student Loan Servicing market. To help address some of these problems would harm borrowers and our economy, i sponsored a number of reforms such as the student loan bar were bill of rights will will provide protections and require workable alternative rePayment Options for private loan borrowers were at risk of default. Notify lenders to borrowers about incomebased repayment plans for federal loans and protect our words from penalties due to errors on the part of the servicer. We know the privacy loans generally have significantly higher Interest Rates, offer omitted Payment Options and no relief for the many graduates who dont make the amount of money that they expected or have been laid off or even unable to find work. Actefinance education addresses this problem by addressing treasury to make the private student loan work more efficient. Loan market more efficient. I look forward to our witness views on student Loan Servicing practices. Let me introduce the four witnesses. We have both at 11 00. We have the votes at 11 00. I asked people to stay within the time is much as they can. Director of the programming granville, ohio. A Grassroots Organization that works to improve the federal direct loan program. For years working at financial offices. She has dedicated her crew to helping students afford a secondary education. Serves as Vice President of external affairs for student veterans of america. Considerable experience advocating on behalf of veterans. He joined the marine corps at. Ge 17 and i robert has some students with him here today. He served as a grade level leader and cofaculty o advisor for the gay straight alliance. Lindsey burke is the education policy chair at the heritage foundation. She has done Extensive Research around the governments role in education. Ms. Hoover, if you would begin. Thank you. And members ofwn the subcommittee, thank you for inviting me to testify today. My name is nancy hoover and im the director of Financial Aid at Denison University in granville, ohio. Liberal artstive college with an enrollment of approximately 2200 students. I have been the director of Financial Aid at denison since 1994. In administered the limitation of a direct loan program in year two of the program. Denisons endowment allows us to award annually Financial Aid from our universities funds to 97 of our student body. An average of 47 of our graduates are a federal loans and 4 borrow private loans. The key motive federal overtedness was a little 21,000. The William D Ford direct loan Program Turns 20 years old this here. The delivery process has continued to be efficient, reliable and easy for school s to administer. The direct loan program was first implemented, all of the loans were serviced by a single contractor. A all correspondence to bar words was identified as the william d federal direct loan program and the logo for the department of education made the servicing contractor for these loans invisible to the students. The department had to expand the number of services to accommodate the increased volume of Loan Servicing required for the purchase of federally backed loans in 2008 and the transition of all schools to the federal direct lending program. The department issued new deal vicing contractors contracts of agencies who had experienced servicing Student Loans in the program and allowed but do not require these new services to cobrand with the department logo. Since the servicers logo appears larger than the partners logo, borrowers are confused as to why they are receiving written or electronic correspondence from an unknown agency. Services report a large percentage of unopened emails from the borrowers because they believe the correspondent is junk mail or spam. The inherent flaw with the carnival full servicer environment is that borrowers do not understand it was servicing their loans and or are at a greater risk of defaulting. Currently, there are 15 contractors servicing federally held loans. The current federal Loan Servicing environment needs to be simplified by a mandate that contractors invisible agents of the federal government with identical processes and policies and the number of contractors with limited be limited. The bipartisan budget act of 2013 a limited special treatment for nonprofit student loan servicers. When the department of education had the opportunity to renew the servicer contract, it should consult with all of the stakeholders and student Loan Servicing and open the contract bidding process to other entities and financial sectors outside the previous environment. Our worst need their point of contact for all repayment activities to be a single portal one phoner number number. An efficient and robust portal at which students can execute every required process for their federal loans except to initiate the repayment process. Student loans. Gov can be expanded so students can begin the repayment process of their federal loans instead of going to a specific service or website. I would like to thank you and other members of the committee for your support of the bank on students emergency Loan Refinancing act. Borrowerss assistant with loans and will service or as to refinance all of their loans to have a single servicer. Required servicers to notify delinquent borrowers about incomebased options. However, with all of the good , it is extremely confusing for students to understand the intricacies of all the current rePayment Options. I encourage congress to reduce the current number of payment plans to two. Standard and incomebased from which students can choose. Repayment should be collected through payroll withholding. Many borrowers are unaware of service their service has been changed until they encounter a problem. Many borrowers have filed complaints to correct errors related to the servicing contracts. Do loan servicers need to provide notice to bar words about a change in their service like the Mortgage Services are required to do. Think you again for the opportunity to provide a Financial Aid administrative perspective on student Loan Servicing and im happy to respond to any questions you might have. Thank you. Mr. Hubbard. Thank you for inviting student veterans of america to cement our testimony on student Loan Servicing. It is our privilege to share this on the ground perspective with you today. Graduate across the country, we believe that the student debt burden will ultimately be one of the largest inhibiting factors to their longterm success. Part, stemsment from a lack of access to information that individual and institutional levels. Veterans consistently fight the following challenges. Difficulty obtaining Accurate Information about loans, convoluted pathways to gathering information and that limiting programs and unnecessary roadblocks in place by servicers. Despite avid efforts to increase protections against abuse practices, Getting Service members the right information about the protections at the right time remains a challenge. Service members and veterans have access to protections under these Service MemberService Release ask. This does not function cohesively and programs often function independent of each other. We have seen that many Service Members enter the military with Student Loan Debt. This existing debt is also a major source of the overall debt. Existing debt is particularly harmful to a Service Member or veteran when servicers do not comply with protections afforded by sacrum. Misconceptionmon that parents should go to school on the g. I. Bill and have a free ticket. You know this is simply not true. As an earned benefit, not only is the g. I. Bill not free, it may not always cover the cost of a full education. This is especially true for those attending private institutions or for those considered outofstate residents. To prevent situations that may violate a Service Member or veterans right, we believe that institutions need to have access to a full range of financial data. For data is necessary institutions to be able to effectively counsel their students about their Financial Futures. Haveiduals should also access to this data to achieve the highest level of consumer awareness. Currently, there is no widely used system that would allow any individual with education debt to see all of their loans in a centralized place. Tool. Could be such a the meteor program has the unique function of providing all itvate lender data in which simply requires the approval of the department of education to access direct loan data. This has yet to happen. While we might not know the full effect of student debt for this generation of veterans, we are beginning to see the first and second affects today. They are significantly less likely to build their own business, save for a home or save for their retirement. The effect of these issues will impact the economy for years to come. And will continue to distort economic behavior if not taken seriously. In light of the issues we have identified, we have recommended various solutions. Of the solutions we have cemented to the record, we would like to highlight one in particular. Program coronation. Many programs exist to support the repayment of Student Loans, though very few of these programs are coordinated. Ifajor opportunity exists current programs record and streamlined to function seamlessly. Putting these pieces together would be an important step forward. In the g. I. Bill becomes an even clearer asset to our economy. When this veterans are empowered with the right tools. I reducing the debt burden on servicemembers and veterans, we can set them up for longterm success. Andhink the chairman Ranking Member and the subcommittee members for your time, attention and devotion to the cause of veterans and i are education. As always, we welcome your feedback and questions and we look forward to continuing our and with this subcommittee the congress to ensure the success of all generations on of veterans. Thank you. Mr. Chairman and the distinct members of this committee, my name is robert and im a social studies teacher at Woodrow Wilson high school here in washington. I come to you as a member of the American Federation of teachers and the washington teachers union. I want to thank chairman brown for the opportunity to testify. Mikes appearances with student debt and loan repayment. I hope that sharing my experiences in the Financial Aid process makes it easier for students and their families to pay for Higher Education. Island and a rhode family of teachers come i always felt like i could make a world make the world a better place by helping kids. I graduated from Rhode Island College with a bachelors degree , having double majored in secondary education in history. While i was fortunate that my parents were able to cover my college tuition, i still had to pay for books and other expenses during my undergraduate years. I started my teaching career with some credit card debt. At the urging of my professors come i sought to teach in an urban area and that is how i ended up here in washington. Fully to admit, i was not prepared for the high cost of living in washington on a starting teacher salary. After several years of teach ing, i knew i needed to further develop my skills. Going for my masters degree would take my energy from a students and their work. I was accepted into one of the most respected teaching programs , Teachers College at columbia university. As able to earn a masters degree in social studies education over three considered summers. The program was the right professional choice for me. Attend thisorder to highly regard program, i had to take out several loans despite my fulltime salary on top of tuition fees, account for two apartments as i cannot contractually sublet my apartment in d. C. I had to pay for travel to new york, books and other typical living expenses. I like to point out that, while affordability is often on tuition, it was really those other expenses that drove up my borrowing. After three summers come i graduated with my masters degree an 37,000 of debt. I received some grant money during my program and subsidized loans over 25,000 for three years. An additional 11,000 in unsubsidized loans. I have been puzzled by several issues. I listen to switch providers twice and it has never been quite clear to me why the transfers were made. Amount has been debited for my Checking Account for my Monthly Payment when those loans were trevor the were transferred last time. When i set up an online account for milos come i found that the information about my loan included payoff options and pay updates was available. The information was never provided to me on my paper statements. Career. Ud of my 12 year my Financial Life has be