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Blog Post | December 22, 2021

The Administration’s Actions on Federal Student Aid Deserve Sustained Scrutiny

Corporate CrackdownEducationEthics in GovernmentExecutive BranchIndependent AgenciesRevolving Door
The Administration’s Actions on Federal Student Aid Deserve Sustained Scrutiny

Biden made big promises to American college students and graduates in his presidential campaign, just to walk them back when he became president. 

“I propose to forgive all undergraduate tuition-related federal student debt from two- and four-year public colleges and universities for debt-holders earning up to $125,000,” Biden wrote in April 2020, “with appropriate phase-outs to avoid a cliff.” He also proposed immediately canceling “a minimum of $10,000 of student debt per person.” 

Now, twenty months later, Biden isn’t any closer to canceling $10,000 of debt per person, much less all of it. White House Press Secretary Jen Psaki confirms that if Congress passed a bill canceling student loan debt, Biden would “gladly sign” it. Yet Congress is unwilling to do so. For eight months now, Biden has been sitting on a memo prepared by Department of Education lawyers on the Secretary of Education’s authority to cancel student debt, without taking action. Meanwhile, the administration decided against widespread outcry to let the pause on student loan payments expire on February 1—only to backpedal as the scope of the Omicron surge became clear. On December 22, Biden extended the loan pause by an additional 90 days; a significant stopgap that still falls short of permanent relief.

The Revolving Door Project is concerned by Biden’s reluctance to employ executive branch solutions for a student loan crisis that afflicts one fifth of adult Americans, with 45 million student loan borrowers collectively owing $1.7 trillion in student loans. With the latest news cycle roiling over Manchin’s destruction of the Democrats’ agenda in Congress, it is more imperative than ever that Biden empower the executive branch to pick up his agenda where Congress has dropped it. And higher education would be a good place to start. 

In 2022, we will be monitoring the White House, Education Department, and Justice Department’s actions on higher education issues. We will pay particular attention to the Education Department, and where it stands one year out of the wreckage of education-saboteur Betsy DeVos’ tenure as Secretary of Education. This is tied to the mission of our new and ongoing Corporate Crackdown project with Data for Progress, assessing the record of Biden’s executive agencies on holding corporations accountable for their lawbreaking. DeVos’ Education Department was uniquely tied to predatory for-profit schools, and we want to see the department make real the ideal that corporations which break the rules and victimize student borrowers should be held accountable.

One Education Department office deserving a spotlight is Federal Student Aid, which oversees the $1.6 trillion portfolio of federal student loans. One of FSA’s vital responsibilities is overseeing, investigating, and bringing enforcement actions against postsecondary schools that offer students federal loans. This October, Federal Student Aid announced its establishment of an Office of Enforcement—which has actually existed since 2016, but was “deprioritized” under Trump—to give muscle to enforcement efforts against “institutions that pose widespread risks to students and taxpayers.” The office has yet to report any new investigations or enforcement cases, and goes unmentioned in FSA’s 2021 Annual Report. We’ll be paying attention to whether this Office of Enforcement actually brings cases against postsecondary schools that defraud their students and strengthens oversight of student loan servicers.

Federal Student Aid’s renewed enforcement effort will require hiring new staff with litigation and prosecutorial backgrounds. It is vital that these new hires be consumer advocates, not corporate defenders. On December 17, FSA opened a two-week hiring window for two new Directors to lead the Borrower Defense Group and the Investigations Group within the Office of Enforcement. Because FSA has direct hiring authority and these positions are not subject to the White House Personnel Office restrictions on lobbying, RDP will watch closely to advocate that FSA does not hire lobbyists or people from firms that represent for profit colleges, private student lenders and loan servicers. We would like to see these and further roles filled by people whose track records exemplify public service, not the revolving door.

Senior positions in the Federal Student Aid office, and throughout the Department of Education, have in past years epitomized the revolving door. It cannot be assumed that people with financial ties to for-profit colleges and student loan services—and the law firms and lobby shops who represent their interests—will act in the interest of the many million debt-burdened students over the few who profit from their debt. The government should not be motivated by profit; its interests are the public’s interests. 

Other higher education issues to watch include the troubling trend of for-profit schools converting to nonprofits to evade rules, and the Education Department’s proposed Title IX rules, forthcoming next April, which would replace the DeVos-era rules that removed many student protections. Another item of concern are income-share agreements, which offer students up-front money in exchange for a percentage of their income down the line. Back in 2019, Elizabeth Warren scrutinized the lack of regulation of the income-share agreements touted by DeVos’ Education Department. Today, income-share agreements continue to grow in popularity.

The questions of whether and how the Education Department will increase its staffing and resources, bring enforcement actions against predatory institutions, and address novel forms of debt and debt forgiveness, endure into the second year of Biden’s presidency. The answers hinge on whether the Biden administration will be willing to eat the costs and take the heat, if it means making a tangible difference in Americans’ lives.

“DSC01452” by Max Lib is licensed under CC BY-NC-SA 2.0.

Corporate CrackdownEducationEthics in GovernmentExecutive BranchIndependent AgenciesRevolving Door

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