SCHUMER WARNS THAT POTENTIAL OFFSET FOR STUDENT LOAN BILL COULD COST HUNDREDS OF JOBS AT PIONEER IN WYOMING CHEMUNG COUNTIES SAYS PLAN IS DEAD ON ARRIVAL AND MUST CHANGE
brbrThe Stafford Student Loan Rate Will Go Up on June 1st and Some in Congress Are Considering An Offset that Would Hurt Sallie Mae-Owned Pioneer Credit Recovery in Wyoming and Chemung Counties Schumer Vows That No Such Plan Will Be on the TablebrbrSchumer Fights to Protect The 850 At-Risk Pioneer Sallie Mae Employees in Western New York and Southern TierbrbrSchumer: Student Loan Rates Must Remain Low, But Not on the Back of Upstate Jobsbrbr
Today, U.S. Senator Charles E. Schumer took a stand against potential plans to offset a student loan bill in a way that could risk hundreds of jobs in Pioneer Credit Recovery's three Western New York facilities in Arcade and Warsaw in Wyoming County and its General Revenue Corporation site in Horseheads, NY in Chemung County. Specifically, Schumer explained that Congress is working on plans to keep the federal Stafford student loan rate from doubling to 6.8% on July 1 st, and is considering paying for it with a policy proposed by the Administration called the "loan rehabilitation" offset. This would threaten 850 jobs of the total 1,300 at Pioneer's three locations: two Pioneer facilities in Wyoming County and one General Revenue facility in Chemung County. Schumer said that while it's critical for student loan rates to remain low, and supports keeping them down, it cannot happen on the back of Wyoming and Chemung County jobs.
"Clearly, it is critical that student loan rates for college must remain low so that college is affordable, but it cannot happen on the backs of Upstate New York jobs," said Schumer. "Any offset that risks hundreds of jobs at Pioneer in Wyoming and Chemung counties is dead on arrival, and I will make it loud and clear to my colleagues, and to the Administration, that this is the case."
A copy of Schumer's letter to Secretary Duncan appears below:
I would like to thank you for your leadership on ensuring the availability of affordable federal financial aid options for our nation's students. I write today to again express my concern over a potential provision that was included in the Department of Education's Fiscal Year 2014 budget proposal and may be proposed as an offset to a legislation extending the subsidized Stafford loan interest rate at 3.4 percent. I ask that you reconsider the provision that would reduce payments to guaranty agencies in the Federal Family Education Loan (FFEL) program that successfully rehabilitates defaulted student loans.
The proposed cuts, if adopted, would reduce reimbursement to guaranty agencies for rehabilitating these loans well below the Department of Education's total cost of collecting defaulted loans, jeopardizing the ability of guaranty agencies to pursue this labor intensive yet "winwin" outcome for borrowers and taxpayers. In 2011, guaranty agencies accounted for over twothirds of the $12 billion in collections on defaulted student loans. I believe that passage of the proposal would result in lower overall collections and deprive thousands of borrowers of the helping hand they need to get back on track to repay their loans.
I strongly support investments in federal student aid programs, and am aware of the necessity to continue to fund these programs to ensure that a college education is affordable to all students. While this change would generate a shortterm savings, I fear that, in the long run, it will lead to a significant decrease in rehabilitated loans, increasing the burden of the defaulted loans on American taxpayers and placing these borrowers in an increased economic bind. I believe we can find a solution to fully support the subsidized Stafford Loan program while ensuring that students who default on their student loans have the ability to get back on track and preserve their credit.
As you know, loan rehabilitation is the only means of resolving a defaulted student loan that removes the blemish of default from the borrower's credit report, and is therefore the best way to assist defaulted borrowers. Loan rehabilitation also allows the borrower to regain eligibility for federal student aid. I am concerned that this proposal will hurt defaulted borrowers who are in need of this fresh start on their student loans and are willing-with assistance from guaranty agencies-to demonstrate a commitment to repayment. I would be appreciative to know the number of student borrowers in default that complete loan rehabilitation through the help of guaranty agencies.
Finally, in addition to hurting student borrowers and taxpayers, this proposal would also harm the guaranty agencies and their efforts. Not only do these agencies offer vital services for students, but they support excellent employment opportunities in my community. One company in Western New York employs roughly 1,300 people; over half of which, work directly assisting guarantors in collecting and rehabilitating defaulted loans. This is a sizeable local employer and quite significant part of the local economy. We cannot afford to limit students' abilities to rehabilitate defaulted loans and stifle our job creators' opportunities.
With student loan defaults hitting record levels, services by guaranty agencies that help borrowers manage their student loan responsibilities, repair their credit and regain eligibility for federal aid are more critical than ever. As you continue the work of ensuring the availability of affordable federal financial aid options, please reconsider the potential harm that a cut to guaranty agencies that rehabilitate defaulted student loans may have on this endeavor. Thank you for your tireless work on behalf of our nation's students and for your consideration of this request.
Charles E. Schumer
United States Senator