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

“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, overseeing the illegal garnishment of wages of thousands of struggling borrowers during the pandemic,” Warren said. “Students deserve leadership in this office who obey the law and make this program work for students.”

The Student Aid Bureau will be central to any changes the Biden government is considering to federal student loan programs – such as optimizing income-related repayment options, making lending easier for public servants, canceling large chunks of existing debt, and combating Student loan servants and nonprofit colleges.

In contrast to typical political representatives who step down at the beginning of each new presidential administration, the head of student aid is appointed by the Minister of Education for a term who can remove the person for an important reason. The President may also, for any reason, oust the nominated candidate who is not subject to Senate approval.

Brown, who has headed the office since March 2019, announced to his colleagues earlier this week that he is ready to step down and leave his post soon.

During this week’s virtual staff meetings, he said that no one had specifically asked for his resignation, but that he was discussing his role with new political representatives in the Biden administration, according to several people in the appeals.

If Brown resigns or is removed, it wasn’t immediately clear who would replace him, even in an acting capacity. Brown announced to staff on Friday that his top deputy, Joe Lindsey, would be leaving the agency with immediate effect.

The Biden government has not publicly discussed its plans for the Federal Office for Student Aid, one of the largest units of the Ministry of Education with around 1,300 employees.

A department spokesman declined to comment on Friday. Biden’s election as education minister, Miguel Cardona, is awaiting confirmation from the Senate, which will hold a hearing on his nomination next Wednesday.

The head of the student services bureau was once a relatively obscure role of government management but has become more politically controversial in recent years as the federal government’s portfolio of student loans has grown to more than $ 1.5 trillion, owed by approximately 45 million federal borrowers .

The Biden administration inherits a student aid bureau that is in the midst of an attempted overhaul of massive federal contracts with student loan service companies. The project – known as Next Gen – has seen a number of starts and stops over the past four years as the Trump administration faced lawsuits and bipartisan objections from Congressional appropriators who put restrictions on the project on state budget bills .

The office is also working to implement new laws to make it easier to apply for federal financial aid and register income-related repayment options. And it continues to create the unprecedented hiatus in most federal student loan payments and interest that the administration extended through October.

The last two administrations toyed with the idea of ​​transferring the student loan portfolio to the finance department. And DeVos proposed in 2019 to outsource the office as an independent federal authority.

Progressives like Warren have long pushed for the Student Aid Bureau to regulate student loan companies and nonprofits more aggressively. But these struggles escalated significantly during the Trump administration.

Democrats and consumer groups have criticized the Trump administration for its decisions to help student loan service providers fend off scrutiny from state regulators and the Consumer Financial Protection Bureau. The student help office, for example, ordered company Collecting federal student loans so as not to respond directly to requests for information from government agencies.

More recently, the education department was sued last year for continuing to collect wages from borrowers on student loan defaults despite Congress banning the practice in response to the pandemic. The ministry argued in court that it did everything it could to stop the seizure of borrowers ‘wages, but borrowers’ employers were disregarding federal guidelines.

The student assistance bureau also came under fire last year after one of the companies it hired to collect student loans falsely reported information to credit bureaus about approximately 5 million borrowers whose payments were suspended during the pandemic, which in some cases affects creditworthiness the borrower lowered.

Randi Weingarten, the president of the American Federation of Teachers, who has grappled with education on many occasions about managing the public loan program, is also calling on Biden to appoint a new student loan director.

“We need to redefine how the education department handles student loans to ensure borrowers have an opportunity to flourish after the DeVos disaster,” she said in a statement previously reported by MarketWatch along with Warren’s comments.

Among the names being circulated by progressive groups as a potential candidate for a new head of Federal Student Aid is Mark Kaufman, a former Treasury Department official during the Obama administration who previously served as Maryland’s top banking regulator.

Seth Frotman, director of the Student Borrower Protection Center and former student loan ombudsman at CFPB, said Kaufman would represent “a fundamental change at the FSA.”

“Mark was a major force in the Treasury trying to reform a broken student loan system and has consistently advocated for consumers with special interests in the financial services industry throughout his career,” said Frotman.

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

James Runcie, an Obama administration-appointed representative, suddenly resigned in May 2017 after arguing with DeVos over whether he had to testify before a board of congressional officials and attract the ire of some GOP lawmakers. In a letter of resignation, Runcie beat up political candidates for badly running the office.

DeVos appointed A. Wayne Johnson, a longtime manager in the financial services industry, to the role a few months later. Johnson stepped down from that role in early 2018 before leaving the agency entirely in 2019 to make a surprise, long-term bid for the Georgia Senate on a widespread student loan provider platform.

James Manning, a longtime education officer and top advisor to DeVos, served as acting head of the office until Brown, an Air Force general with a 32-year career in the military, was appointed in March 2019.

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