Elizabeth Warren said a student-loan CEO gave false information to Congress. A Republican senator agreed.

EW   Photo by Tom Williams Pool:Getty Images
Sen. Elizabeth Warren (D-MA). Tom Williams/Getty Images
  • Elizabeth Warren and John Kennedy said a student-loan servicer CEO may have given false testimony in April.
  • They said PHEAA CEO James Steeley may have lied about the management of a loan-forgiveness program.
  • The lawmakers are holding another hearing to give Steeley a chance to explain his testimony.
  • See more stories on Insider’s business page.

As chair of the Senate subcommittee on economic policy, Elizabeth Warren in April invited the CEOs of the country’s major student-loan servicers to testify on the impact of student debt on borrowers.

She, and the subcommittee’s Republican ranking member, John Kennedy, say that one of them may have given false testimony.

On Wednesday, Warren and Kennedy sent a letter to Pennsylvania Higher Education Assistance Agency (PHEAA) CEO James Steeley regarding “what appear to be false and misleading” statements from his testimony during the hearing. PHEAA administers the Public Student Loan Forgiveness (PSLF) program, which forgives student loans for public services workers after 120 monthly qualifying payments.

Citing data provided by the Education Department, the senators wrote in their letter than Steeley incorrectly stated that PHEAA has not been penalized for mismanaging the PSLF, which they said is a “serious matter.”

“Our hearing was held in part to understand the role of student loan servicers and the extent to which they bear responsibility for the myriad failures of the student loan program,” the senators wrote. “But it appears that you have failed to provide accurate information about your company, undermining the Subcommittee’s fact-finding role and potentially misleading committee members and the public.”

During the testimony, Warren first asked Steeley if PHEAA’s automated system mistakenly disqualifies payments, to which Steeley responded: “I’m sorry, Senator. I don’t believe that that is correct.”

Warren then asked if the Education Department has ever penalized PHEAA for mismanagement, and Steeley said it had not.

But Education Department reviews suggested the contrary. Warren and Kennedy cited nine reviews since 2016 that revealed problems with the servicer’s implementation of PSLF, resulting in four corrective action plans and two fines, each more than $100,000.

“It is not clear how or why you provided information that appears to be inaccurate: while it is inexplicable that you were not aware of this series of Education Department findings and penalties relating to your company, it is equally incomprehensible that you would have subjected yourself to criminal penalties by ‘knowingly’ and ‘willfully’ providing false information to Congress,” Warren and Kennedy wrote.

President Joe Biden campaigned on reforming PSLF, but Insider reported earlier this month that 98% of applicants are still being rejected from the program since Biden took office, according to Education Department data.

Biden’s regulatory agenda also includes reviewing PSLF and “plans to look at these regulations for improvements,” but no further detail was provided on what the mentioned improvements would look like.

The lawmakers will be holding a follow-up hearing to give Steeley the chance to explain the inaccuracies in his testimony.

PHEAA did not immediately respond to Insider’s request for comment.