Around 14% of Connecticut residents have student loan debt — in total, close to 500,000 residents owe more than $17 billion.
According to U.S. Senator Richard Blumenthal (D-CT), since student loan payments returned in October, some of those borrowers have had administrative issues while trying to pay their debt.
“Loan servicers are sending inaccurate bills, failing to respond to customer or borrower calls, delaying processing; a series of raft of abuses that ultimately penalizes the borrowers, everyday Americans who have taken loans and still own debt,” Blumenthal said.
Blumenthal is calling on the federal government to penalize loan companies, like MOHELA, one of the largest loaners in the U.S., until the issues are resolved.
The Biden administration has withheld millions of dollars in payments to the companies — Blumenthal said they should withhold more.
“Those penalties are insufficient as an incentive or deterrent,” Blumenthal said. “We need to ramp up the penalties for aberrant loan servicers who disserve borrowers and we need to extend the forbearance in collection.”
Student loan forgiveness was an issue that President Joe Biden campaigned on. On Friday, his administration announced it would forgive almost $5 billion in student debt for more than 70,000 Americans.
Cristher Estrada-Perez, executive director of the Student Loan Fund in New Haven, pointed to the loaner’s administrative issues as a reason to cancel student loan debt for everyone.
“The only solution out of this is to cancel all student debt,” Estrada-Perez said. “Servicers have proven that they are negligent and unreliable. And it's time that we put student borrowers first. We deserve full student debt cancellation.”
