SCHUMER VISITS LOAN REHABILITATION FACILITY & EMPLOYEES IN HORSEHEADS FOLLOWING HIS SUCCESSFUL FIGHT TO PROTECT HUNDREDS OF JOBS– SCHUMER STAVED OFF POTENTIAL OFFSET IN STUDENT LOAN BILL THAT WOULD HAVE COST CHEMUNG COUNTY JOBS, VOWS TO FIGHT OFFSET IN FUTURE
During Student Loan Debate, Some in Senate Considered An Offset that Would Hurt Sallie Mae-Owned Pioneer Credit Recovery in Chemung County – Schumer Fought Colleagues Repeatedly to Keep Offset Out of Final Student Loan Bill, With Southern Tier Jobs in Mind
Schumer Defended 1,300 Pioneer, GRC & Sallie Mae Employees in Western New York and Southern Tier; Specifically 420 in Horseheads, 315 in Perry, & 115 in Arcade Who work on Loan Rehabilitations – Joins Employees to Celebrate & Vow Continued Support
Schumer: Southern Tier Jobs Should Never Be On The Chopping Block
Last week, at the Sallie Mae-owned General Revenue Corporation (GRC) facility in Horseheads in Chemung County, U.S. Senator Charles E. Schumer met with employees and executives following his successful effort to oppose a legislative offset that would have risked hundreds of jobs in Sallie Mae’s three Western New York facilities: its General Revenue Corporation site in Horseheads and Pioneer Credit Recovery’s two facilities in Perry and Arcade in Wyoming County. The offset was proposed during the debate on the student loan rate bill, and Schumer successfully prevented the measure from making it into the final bill, thus preserving 850 jobs at the three locations, 420 of which are located at the Horseheads facility.
Schumer explained that Congress, when working on plans to keep the federal Stafford student loan rate from doubling to 6.8% on July 1st, considered paying for it with a policy proposed called the “loan rehabilitation” offset, which threatened the business that supports 1,300 jobs, specifically the 850 jobs focused on rehab by slashing federal reimbursements to guaranty agencies that do loan rehabilitation work. Schumer announced at the time, in May 2013, that any such offset would be dead on arrival in the Senate, and he successfully fought to keep the provision out of the final student loan bill compromise. In 2012, Schumer opposed a similar plan. Schumer noted in Horseheads that while he has successfully opposed this legislative offset twice so far, it may come up in the future, at which point he would continue to stand up for Southern Tier jobs by opposing the measure.
“I am thrilled to announce that we avoided a harmful offset in the student loan debate that would have put hundreds of New York jobs at risk, including about 420 at the Sallie Mae General Revenue Corporation here in Horseheads. This is cause for celebration, and I have been loud and clear with my Senate colleagues that I will oppose using this offset in any piece of future legislation,” said Senator Schumer.
Schumer continued, “I was a leader in the fight to keep student loan rates low so that college is affordable, and I’m glad we did so in a way that was not on the backs of Upstate New York jobs. And beyond the significant jobs impact, this was the right thing to do on policy because loan rehabilitation work is more important than ever. I will always go to bat for Pioneer and GRC, their hundreds of jobs in Chemung and Wyoming counties, and the top-notch work they do for our students.”
Schumer was joined by Jeff Mersmann, Vice President of Sallie Mae and President of General Revenue Corporation, Chemung County Executive Tom Santulli; Don Zeigler, Mayor Village of Horseheads; Sallie Mae/General Revenue Corp employees, executives, and other local elected and economic development officials.
“Senator Schumer is a long-time consumer advocate and tireless fighter for the citizens of New York. His advocacy for loan rehabilitation means federal student loan borrowers in default will not be deprived of the assistance and debt counseling they need. He appreciates the hard work of our employees who perform this service with compassion, helping Americans get back on track and making it easier for them to access new credit so they can support their families, buy homes and contribute to the economy. Senator Schumer fights for us and our jobs,” said Jeff Mersmann, Vice President at Sallie Mae and President of General Revenue Corporation.
Starting as early as May, when the debate over the student loan rate began this year, a proposal was made in Congress to use an offset to pay for the rate deduction from 6.8% to 3.4% that would have harmed Pioneer and GRC’s three Western New York facilities. Schumer explained that the offset would have drastically cut reimbursements to ‘guaranty’ agencies that are serviced by Sallie Mae-owned Pioneer and GRC – by performing loan rehabilitation work for those guarantors. Therefore, if enacted, the provision would have put GRC and Pioneer employees at risk of being laid-off. Currently, the Sallie Mae-owned Pioneer and GRC companies have 850 employees who work specifically on loan rehabilitations out of their 1,300 employees:
· The GRC subsidiary in Horseheads, NY has 420 employees;
· Pioneer Credit Recovery in Perry, NY has 315 employees;
· Pioneer Credit Recovery in Arcade, NY has 115 employees doing this work.
Schumer highlighted that the targeted funding in the offset is not a subsidy or give-away, but a reimbursement that is only given to the facilities if they succeed in getting borrowers to make their payments.
Starting from its initial proposal, Schumer has fought back against this offset at every turn. In fact, this was the second time Schumer rallied against cuts to the loan rehabilitation program. The first was last year when Schumer wrote to Secretary of Education Arne Duncan with regard to the Administration’s FY2013 budget, during a previous attempt to cut $2.9 billion from the Loan Rehab program to cover the cost of Pell Grants. Schumer made clear he would block any student loan deal that would have been paid for on the backs of Western New York and Southern Tier jobs.
Ultimately, the Senate amended the House Student Loan Bill called the Smarter Solutions for Students Act, H.R. 1911, and passed the Bipartisan Student Loan Certainty Act, S.B. 1334, to keep the student loan rate for federally-subsidized Stafford loans from doubling from 3.4% to 6.8% and applying that fix retroactively to July 1st. Neither piece of legislation passed by the Senate, which were later approved by the House, contained the offset that would have put Chemung and Wyoming County jobs at risk.
At his visit to the GRC facility, Schumer addressed employees and management. Schumer cited a recent analysis by the Consumer Financial Protection Bureau that found 6.5 million Americans are in default on their federal student loans—or roughly one in eight—a rate which has tripled since 2003. Schumer explained that because of the high incidences of default, loan rehab agencies like Pioneer and GRC are immensely important to both students and the federal government. Through loan rehabilitation, a student is brought out of default, which removes the blemish of default from their credit report, and allows them to get back on track with their loan payments and preserve their credit. And by recouping defaulted payments on federal loans, these loan rehab agencies return money to the federal government. In 2011, loan rehabilitation work by guaranty agencies accounted for over two-thirds of the $12 billion in recoveries on defaulted student loans.
A copy of Schumer’s initial letter to Secretary Duncan appears below:
Dear Secretary Duncan,
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 “win-win” outcome for borrowers and taxpayers. In 2011, guaranty agencies accounted for over two-thirds 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 short-term 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.
Sincerely,
Charles E. Schumer
United States Senator