October 20, 2021

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A Betsy DeVos Holdover Is Still In Charge Of America’s Student Loans

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Advocates for student loan borrowers are pressuring President Joe Biden’s administration to fire the head of Federal Student Aid, a Trump administration holdover they say has mismanaged an office that could be key in advancing Democratic goals to make college more affordable. 

The pressure ― already coming from progressive Sen. Elizabeth Warren (D-Mass.) and American Federation of Teachers President Randi Weingarten ― is likely to increase now that Education Secretary Miguel Cardona has taken office. The White House has said only Cardona has the power to formally oust Mark Brown, a retired Air Force general who then-Education Secretary Betsy DeVos chose to lead the office in 2019. DeVos appointed Brown to a three-year term that ends in 2022. 

“These decisions will affect the financial futures of tens of millions of people,” said Mike Pierce, the policy director at the Student Borrower Protection Center. “Are they going to trust the guy who was Betsy DeVos’ yes-man? That’s crazy.”

The White House and Education Department declined to comment.

Progressives have pressured Biden to forgive student loan debt en masse, but advocates also believe firing Brown ― and picking the right person to succeed him ― could lead to far better management of existing loan forgiveness programs, including the Public Service Loan Forgiveness Program, which is infamously difficult to qualify for

“They need somebody in place that’s going to hold the servicers accountable, and make sure the student loan program is working for borrowers,” said Alexis Goldstein, a senior policy analyst at Americans for Financial Reform. “I’m just not confident Mark Brown is that person.”

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Betsy DeVos, who at the time was secretary of education, listens as Mark Brown, the head of the Federal Student Aid office, speaks during a hearing before the House Education and Labor Committee on Dec. 12, 2019. 

Federal Student Aid is a relatively obscure office and its leader is not subject to Senate confirmation, but its responsibilities are massive. 

The office employs one-quarter of the Education Department’s workforce, oversees the Pell Grant program for low-income students, and is in charge of more than $1 trillion worth of student loan debt held by 45 million borrowers ― a total that would make it the nation’s fifth-largest bank.  

And the office has problems to match its size. Progressives argue it is plagued by a revolving door of staffers who jump between working for FSA and working for large student loan servicers like Navient and Great Lakes, and they say it has failed to protect borrowers and hold loan servicers accountable. The office’s struggles are well-known, and even prompted DeVos to propose spinning off FSA as an independent agency in 2019. 

On his first day in office, Biden extended a pause on student loan payments until the end of September. The head of FSA could play a key role in shaping and determining whether the administration extends that breaks, forgives student debt, restarts the loan machine or takes another path altogether. 

“It’s incumbent upon FSA to be working really hard on a plan to make sure that transition happens smoothly and borrowers are able to get all they help they need when they come back into repayment,” said Clare McCann, the deputy director of federal policy for the New America Foundation’s higher education program.

Two advocacy groups ― Student Defense and the National Consumer Law Center ― sued the Brown-led FSA last year for failing to stop wage garnishments for hundreds of thousands of borrowers who were behind on their loans during the pandemic, as required by the CARES Act. Warren has specifically cited the garnishment fiasco in her calls for a new agency head. 

The office also faced intense criticism after Great Lakes, a major student loan servicer, provided inaccurate information to credit agencies last year, hurting some borrowers’ credit scores.

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Miguel A. Cardona at his confirmation hearing to be secretary of education. He officially took on the role Tuesday.  

Two advocates with knowledge of the situation said the administration is actively considering firing Brown, but that it was also possible the FSA leader would resign in the coming weeks in order to avoid a high-profile dismissal. 

If Brown is ousted, progressives are wary of for-profit colleges or student loan servicers influencing who Biden and Cardona pick to replace him.

Some progressives hope Mark Kaufman, a former Maryland banking regulator and Treasury Department official who worked closely with progressive Sarah Bloom Raskin during the Obama administration, would get the job. 

But Kaufman is far from a lock. Some White House aides are pushing for Abigail Seldin, a former executive at the Education Credit Management Corporation who created an occasionally controversial tool to judge college costs, to get the job, according to one Democrat following the issue who spoke on the condition of anonymity to discuss intraparty dynamics

Progressives are skeptical of Seldin’s ties to ECMC. For years, the federal government has hired the Minnesota-based company to fight student loan debtors who try to discharge debt in bankruptcy, and borrowers and advocacy groups have repeatedly accused the company of hardball tactics.

McCann and other advocates were hopeful about the chances for reform at the agency. They noted that Ben Miller, a former vice president for higher education policy at the Center For American Progress and an author of several white papers on reforming the agency, was set to serve as a senior adviser to the department’s chief of staff. 

During his confirmation hearing, Warren pressed Cardona on how he would run FSA.

“Under your predecessor, [FSA] was on the side of greedy student loan servicers instead of borrowers,” she said. “Will you commit to developing a plan to reform FSA so that it works for student borrowers instead of for big corporations?” 

“Yes,” Cardona replied.

Now he has the chance.

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