Student-loan companies 'didn't care' when debt loads surged for borrowers and 'became unpayable,' Elizabeth Warren says

• Sen. Elizabeth Warren told Teen Vogue high interest rates on student debt can keep people in "repayment forever."
• She added that student-loan companies that collect debt prioritize profits over borrowers' ability to pay.

High interest rates on student loan can keep borrowers paying off their debt for a lifetime — and a top senator says the companies that collect that debt aren't helping.

Massachusetts Sen. Elizabeth Warren, a leading lawmaker calling for $50,000 in student-debt forgiveness for every federal borrower, told Teen Vogue in an interview that compounding interest on student loans can trap borrowers into paying off more debt than they originally borrowed, keeping them in "repayment forever," and student-loan companies aren't much help when borrowers find themselves in a bind.

"We've [also] had student loan debt servicers who didn't work to try to get people into the right repayment plans," Warren said. "They just put people into the plans that work best for the servicer. And if that meant that the student's debt compounded and became unpayable, the servicing company didn't care. They raked in millions of dollars in profits anyway."

The $1.7 trillion student debt crisis grows each day, with 43 million federal borrowers currently in debt to the government. And while student-loan payments have been on pause for nearly two years, many borrowers still have substantial student debt loads they are worried about paying off on May 1, which is why Warren and some of her Democratic colleagues are calling for not only the student-loan industry to be reformed, but for Biden to cancel student debt altogether.

As Insider has previously reported, interest rates on student loans are a primary contributor to the growing student debt load. Daniel Tapia, a borrower that originally took out $60,000 in student loans, now has an $86,000 debt load thanks to interest.

"What I don't get is if I took out a certain amount, and I paid that amount already, and I still owe more than I originally owed, it's just nuts," Tapia told Insider. "It's mind-boggling to me that this total amount is not going down. It's not going away."

Interest rates on student loans increased in July, with the rates for undergraduate loans at 3.73%, rates for graduates and professionals at 5.28%, and rates for PLUS loans for parents and graduate students at 6.28%, and if borrowers fall behind on their payments, the interest doesn't stop growing.

Warren has long held the student debt crisis in her sights, and along with pushing for student-loan forgiveness, she has frequently called out abusive practices by student-loan companies. Most recently, for example, Navient — one of the largest companies — reached a $1.85 billion settlement over "widespread unfair, deceptive, and abusive student loan servicing practices and abuses in originating predatory student loans," according to 39 attorneys general.

Warren called the settlement "a major step to deliver relief for borrowers & hold Navient accountable." She also told Insider in a July interview that "the days are over" when loan companies "could do a terrible job."

"The world has changed for student-loan-debt servicers," Warren said. "They can't sign a contract, do a lousy job, cost borrowers tons of money, and still get their contracts renewed."