Elizabeth Warren says she's worried Biden's second attempt at broad student-loan forgiveness won't hold up in the Supreme Court

• Insider spoke with Sen. Elizabeth Warren about the student-loan industry and return to repayment.
• She said she's worried about how the Supreme Court would handle Biden's new plan for broad relief.

Sen. Elizabeth Warren of Massachusetts was keeping an eye on the student-loan industry even before she became a lawmaker.

As a professor at Harvard Law School in the early 2000s, she studied the impact of debt on Americans — and later spearheaded the creation of the Consumer Financial Protection Bureau in 2011, which has since enacted strict oversight of the federal student-loan industry.

"This industry has a horrible track record," Warren told Insider in an interview. "Their failure to serve students has dated back decades. We uncovered evidence of student-loan errors and refusal to help students before I even got to the Senate."

Her focus on the industry strengthened once she was elected to the Senate in 2012 — since then, she has become a leading voice on accountability for companies that service student debt and has pushed for broad forgiveness. While President Joe Biden's initial plan to cancel up to $20,000 in student debt for federal borrowers fell short of Warren's push for $50,000 in relief, she threw her support behind it and later criticized the Supreme Court for striking it down.

The Education Department announced a plan to pursue broad debt relief using a different law, but Warren said she's worried the new push would face the same fate in the conservative-majority court.

"The Supreme Court failed to follow the explicit language of the law and turned his efforts upside down," Warren said. "That raises serious concerns for whatever comes next. I'm glad that the administration is going through negotiated rulemaking, but an extremist Supreme Court that fails to follow the law threatens that process no matter how clearly legal it is."

Negotiated rulemaking includes a series of negotiation sessions with stakeholders to craft the new debt-relief plan using the Higher Education Act of 1965, along with an opportunity for the public to comment on it. It'll likely take at least a year, and there's no guarantee it'll be free of legal challenges.

"We have a court today that has jumped the boundaries of the rule of law, and that undermines every effort that the federal government takes on that might conflict with the political views of the extremists on the court," Warren said. "So I think the Biden administration is doing the right thing. But yes, I am concerned about what this court will ultimately do with Biden's rulemaking."

The need for bolstered oversight of student-loan companies

Beyond broad student-loan forgiveness, the most pressing issue facing millions of federal borrowers is the return to repayment. In September, interest began accruing again on balances after an over three-year pause, and bills started becoming due this month. But in the months leading up to the transition, many borrowers reported issues with their servicers, from hourslong hold times with customer service to errors with their billing statements. One borrower previously told Insider gearing up for repayment had left her feeling "tremendously hopeless."

It's an issue Warren said she's watching closely.

"When the student-loan servicers are giving bad advice, putting people in the wrong repayment programs, and making mistakes in what they charge, it takes a terrible problem and makes it 100-fold worse," she said. "I've talked to many people who were in tears over the frustrations they felt with their student-loan servicers."

Oversight is a key thing the industry has been lacking, Warren said. She credits the Biden administration with "weeding out some of the truly bad apples in the industry" but said more needed to be done. Servicers have cast the blame on a lack of resources from the Education Department. While Biden has asked Congress for more Federal Student Aid funding to help administer the repayment programs, House Republicans have proposed funding cuts for the office, which some servicers have said would leave them without enough staff to manage the influx of daily borrower questions.

Warren, however, isn't convinced by that argument. She said servicers continued to receive funding during the pandemic even when millions of borrowers were not making payments and that because of that, "they should now be fully prepared to meet the needs of the students as the repayment plans are turned back on."

"For them to come in now and cry poverty because it's hard to send out accurate bills to people who owe money does not prompt much sympathy," she said. "They signed contracts to administer the loan system accurately. Those are profitable contracts. But the servicers want even more money? I have no sympathy at all."