Dive Brief:

• The chief operating officer of the Federal Student Aid office faced questions from the U.S. Senate’s education committee about the Department of Education’s contracting with student loan servicing companies.
• James Runcie, one of the top U.S. Department of Education officials, testified before the committee that loan default rates and borrower satisfaction with the loan servicers has improved since 2009.
• Democrats on the Senate committee criticized the education department for not holding servicer SLM Corp., also known as Sallie Mae, accountable for repeated rules violations.

Dive Insight:

Runcie was left to face the music after the four main loan servicers used by the education department — Sallie Mae, Nelnet, Great Lakes, and the Pennsylvania Higher Education Assistance Agency — all declined invitations to appear at the Senate committee hearing. Senators pressed Runcie on Sallie Mae, pointing to the education department’s decision to renew its contract with the company despite investigations by the Department of Justice, the Federal Deposit Insurance Corporation, the Consumer Financial Protection Bureau, and some states. Separately, Runcie reported to the committee that nearly 150,000 borrowers have applied for a program that caps federal loan repayments based on borrower income and provides loan forgiveness after 20 or 25 years.