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Senator Warren invites CEO of student loan giant Navient to debt burden hearing

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Sen. Warren has invited the CEO of student loan giant Navient to an upcoming debt burden hearing. Yahoo Finance’s Aarthi Swaminathan shares the details.

Video Transcript

ZACK GUZMAN: Welcome back to Yahoo Finance Live. Student loan giant Navient, which serves federally backed loans for roughly 5.8 million borrowers, is being asked to attend a Senate hearing by way of invitation from Senator Elizabeth Warren, an outspoken critic of student loan practices. And Yahoo Finance's Aarthi Swaminathan joins us for more on that invite, which was exclusively obtained by her. And Aarthi, what do we know about this when we look at kind of where we're at in the student loan crisis?

AARTHI SWAMINATHAN: Yeah, hey, Zack. So it's really interesting because this is one of the first hearings that Warren is going to serve as the chair of a specific subcommittee, which is focused on banking and finance. But I thought this was really big for the whole conversation on student loans. Because, number one, she has been pushing for $50,000 in cancellation, but now she's also trying to examine why. Why are we here? Why are we at $1 trillion, right?

And so this invitation was extended just to Jack Remondi, the CEO of Navient, Navient the biggest, most public facing company, and one that has been, frankly, pretty demonized in the press and by progressives. So, by the way, this entire invitation is voluntary, not mandatory. So you can choose not to attend. But Navient has so many things that it needs to address-- lawsuits from state attorneys general based on alleged deceptive practices. It has a $22.3 million fine that it still hasn't paid to the federal government. It has a Consumer Financial Protection Bureau lawsuit.

So there's a lot of things on the table. But the reason why this hearing is so important is because all these regulators, the CFPB regulator, Warren, have all repeatedly said the reason why the crisis got so bad was because of bad servicing. So that's why it's going to be really interesting to hear him, if he attends, explain his side of the story, right?

AKIKO FUJITA: Aarthi, we've also got the Department of Education going to extend the payment [INAUDIBLE] for those federal family education loans. So what more do we know about how many people that's going to affect?

AARTHI SWAMINATHAN: Yeah, Akiko, this is-- initially, that was going to be a big one, but it affects about one million people. And it specifically affects those with private federal family education loans that have gone into default. Now this is a big one because you would have had your wages garnished. Your tax refunds-- and this is during the pandemic.

So for these one million borrowers, the education department is going to stop that collection, stop interest accruing, and also return the money back, fix credit. Bureau of-- fix the credit information. So this is a really big deal for 1 million people, but, again, there are 6 million people in the category who have been paying loans. This doesn't really affect them. This just affects those with defaulted loans. A small step, but pretty significant for the 1 million people involved.

AKIKO FUJITA: Yeah, no question about it. Any extension certainly good, especially if you're one of those 1 million. Aarthi Swaminathan, thanks so much for bringing us that story.