Financing

Biden faces pressure to oust DeVos-appointed federal student loan chief

“Whether it was incompetence, malice or a mixture of the two, the Department of Education’s student loan bank under Betsy DeVos was a disaster and oversaw the illegal seizure of the salaries of thousands of people. ‘struggling borrowers during the pandemic,’ Warren said. “Students deserve leadership in this office that will follow the law and make this program work for students. “

The student aid office will be at the heart of any changes the Biden administration plans to make to federal student loan programs, such as adjusting repayment options based on income, easing l cancellation of loans for public servants, cancellation of large swathes of existing debt, and crackdown on student loan departments and for-profit colleges.

Unlike typical politicians who resign at the start of each new presidential administration, the head of student aid is appointed for a term by the secretary of education, who can remove the person for cause. The president can also remove the appointee, who is not subject to confirmation by the Senate, for any reason.

Brown, who has headed the office since March 2019, told colleagues earlier this week that he was ready to step down and could step down soon.

He said at virtual staff meetings this week that no one had explicitly asked for his resignation, but was discussing his role with new politicians in the Biden administration, according to several people during the calls.

If Brown resigns or is removed from office, it was not immediately clear who would replace him, even on an interim basis. Brown also told staff on Friday that his senior deputy, Joe Lindsey, was leaving the agency, effective immediately.

The Biden administration has not publicly discussed its plans for the Office of Federal Student Aid, which is one of the Department of Education’s largest units, employing around 1,300 people.

A spokesperson for the department declined to comment on Friday. Biden’s choice for Education Secretary Miguel Cardona awaits confirmation from the Senate, which is due to hold a hearing on his appointment next Wednesday.

The head of the student aid bureau was once a relatively obscure government management job, but has become more politically controversial in recent years, with the federal government’s student loan portfolio growing to over $ 1.5 trillion. of dollars owed by approximately 45 million federal borrowers.

The Biden administration is inheriting a student aid bureau that is in the midst of an attempt to overhaul massive federal contracts with student loan service companies. The project – known as Next Gen – faced a series of starts and stops over the past four years, as the Trump administration faced lawsuits and bipartisan objections from Congressional appropriators who inserted restrictions on the project into government funding bills.

The office is also working to implement new laws to make it easier to apply for federal financial assistance and enroll in income-based repayment options. And he continues to manage the unprecedented pause on most federal student loan payments and interest, which the administration extended until October.

The last two administrations have toyed with the idea of ​​transferring the student loan portfolio to the Treasury Department. And DeVos in 2019 proposed to run the office as its own independent federal agency.

Progressives like Warren have long pushed the student aid bureau to more aggressively regulate student loan companies and for-profit colleges. But these fights have escalated considerably under the Trump administration.

Democrats and consumer groups slammed the Trump administration for its decisions help student loan service companies fight the scrutiny of state regulators and the Consumer Financial Protection Bureau. The student aid office, for example, commissioned companies collect federal student loans to avoid responding directly to requests for information from state authorities.

More recently, the Ministry of Education was sued last year for not stopping seizing wages student loan borrowers who were in default even though Congress had banned the practice in response to the pandemic. The ministry argued in court that it had done everything possible to prevent the garnishment of borrower’s wages, but the borrowers’ employers had ignored federal guidelines.

The student aid office also came under fire last year after one of the companies he hired to collect student loans incorrectly reported information to credit bureaus around 5 million borrowers whose payments were interrupted during the pandemic, lowering borrowers’ credit scores in some cases.

Randi Weingarten, president of the American Federation of Teachers, who has often fought with the Department of Education over his handling of the civil service loan forgiveness program, also calls on Biden to appoint a new loan chief students.

“We need a reset in the way the education department treats student loans to ensure borrowers can have the opportunity to prosper after the disaster of the DeVos years,” she said in a statement. . reported earlier by MarketWatch with comments from Warren.

Among the names circulated by progressive groups as a potential candidate for a new head of federal student aid is Mark Kaufman, a former Treasury Department official under the Obama administration who was previously Maryland’s chief banking regulator.

Seth Frotman, head of the Center for Student Borrower Protection and former CFPB ombudsperson for student loans, said Kaufman would represent “radical change at the FSA.”

“Mark was a critical force at the Treasury trying to reform a broken student loan system, and time and time again throughout his career he has championed consumers against the vested interests of the financial services industry,” Frotman said. .

The push for new office leadership follows four tumultuous years of the Trump administration with a rotating roster of student aid chiefs.

James Runcie, appointed by the Obama administration, resigned abruptly in May 2017 after in conflict with DeVos whether he should testify before a congressional oversight committee and drawing the wrath of some GOP lawmakers. Runcie lambasted political appointments for mismanagement of the office in a resignation letter.

DeVos a few months later named A. Wayne Johnson, a long-time executive in the financial services industry, in this role. Johnson resigned this post in early 2018 before leaving the agency entirely in 2019 to lead a surprise and long-term candidacy for the Senate in Georgia on a widespread student loan remission platform.

James Manning, a longtime Education Department official and senior DeVos collaborator, was the acting chief of the bureau until Brown, an Air Force general with a 32-year career in the army, be appointed in March 2019.

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