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Progressives are ramping up pressure on the Biden administration to replace the federal official who oversees the nation’s $1.5 trillion student loan portfolio, calling for new leadership to carry out many of the sweeping student debt policy changes they're seeking.
The current head of the Education Department’s Office of Federal Student Aid, Mark A. Brown, was appointed by former Secretary Betsy DeVos for a three-year term that expires in March 2022 with the option for an additional extension.
But Sen. Elizabeth Warren (D-Mass.), as well as consumer and labor groups, are urging the Biden administration to move far more quickly to install a new person in that position, which is responsible for managing the federal government’s vast student lending operations.
“Whether it was incompetence, malice, or a mix of both, the Department of Education’s student loan bank under Betsy DeVos was a disaster and oversaw the illegal garnishment of the wages of thousands of struggling borrowers during the pandemic,” Warren said. “Students deserve leadership at this office who will follow the law and make this program work for students.”
The student aid office will be central to any changes that the Biden administration is considering making to federal student loan programs — such as tweaking income-based repayment options, easing loan forgiveness for public servants, canceling large swaths of existing debt and cracking down on student loan servicers and for-profit colleges.
Unlike typical political appointees who resign at the beginning of each new presidential administration, the student aid chief is appointed for a term by the secretary of Education, who can remove the person for cause. The president can also oust the appointee, who is not subject to Senate confirmation, for any reason.
Brown, who has led the office since March 2019, indicated to colleagues earlier this week that he is willing to step aside and that he may soon leave his post.
He said during virtual staff meetings this week that no one had explicitly asked for his resignation but that he was discussing his role with new political appointees in the Biden administration, according to several people on the calls.
If Brown steps down or is removed, it was not immediately clear who would replace him, even in an acting capacity. Brown also announced to staff on Friday that his top 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 Education Department's largest units, employing roughly 1,300 people.
A department spokesperson declined to comment on Friday. Biden's pick for secretary of education, Miguel Cardona, is awaiting confirmation by the Senate, which is set to hold a hearing on his nomination next Wednesday.
The leader of the student aid office was once a relatively obscure government management job, but it has become more politically contentious in recent years as the federal government’s portfolio of student loans has swelled to more than $1.5 trillion owed by roughly 45 million federal borrowers.
The Biden administration is inheriting a student aid office that is in the midst of an attempted overhaul of massive federal contracts with student loan servicing companies. The project — known as Next Gen — has 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 have inserted restrictions on the project into government funding bills.
The office is also working to implement new laws aimed at making it easier to apply for federal financial aid and enroll in income-based repayment options. And it continues to manage the unprecedented pause on most federal student loan payments and interest, which the administration has extended until October.
The past two administrations have toyed with the idea of transferring the student loan portfolio to the Treasury Department. And DeVos in 2019 proposed spinning off the office as its own independent federal agency.
Progressives, like Warren, have long pushed for the student aid office to more aggressively regulate student loan companies and for-profit colleges. But those fights significantly escalated during the Trump administration.
Democrats and consumer groups slammed the Trump administration over its decisions to help student loan servicing companies fight off scrutiny from state regulators and the Consumer Financial Protection Bureau. The student aid office, for example, ordered companies collecting federal student loans to avoid responding directly to requests for information from state authorities.
More recently, the Education Department was sued last year for failing to stop garnishing the wages of student loan borrowers who were in default, even though Congress had prohibited the practice in response to the pandemic. The department argued in court that it did all it could to stop the seizure of borrowers’ wages but that borrowers’ employers disregarded federal guidance.
The student aid office also came under fire last year after one of the companies it hired to collect student loans incorrectly reported information to credit bureaus about roughly 5 million borrowers whose payments were stopped during the pandemic, lowering borrower credit scores in some cases.
Randi Weingarten, the president of the American Federation of Teachers, who frequently sparred with the Education Department over its management of the Public Service Loan Forgiveness program, is also calling on Biden to appoint a new student loan chief.
“We need a reset in how the Education Department deals with student loans to ensure borrowers can have the opportunity to thrive after the disaster of the DeVos years,” she said in a statement, which was reported earlier by MarketWatch along with Warren’s comments.
Among the names circulated by progressive groups as a potential candidate for a new Federal Student Aid chief is Mark Kaufman, a former Treasury Department official during the Obama administration who previously served as Maryland's top banking regulator.
Seth Frotman, the head of the Student Borrower Protection Center and former student loan ombudsman at the CFPB, said that Kaufman would represent a "sea change at FSA."
“Mark was a critical force at Treasury trying to reform a broken student loan system, and time and time again throughout his career has stood up for consumers over special interests in the financial services industry,” Frotman said.
The push for new leadership at the offices follows a turbulent four years of the Trump administration with a rotating slate of student aid chiefs.
James Runcie, an Obama administration appointee, resigned suddenly in May 2017 after clashing with DeVos over whether he needed to testify before a congressional oversight panel and drawing the ire of some GOP lawmakers. Runcie blasted political appointees for poor management of the office in a resignation letter.
DeVos several months later appointed A. Wayne Johnson, a longtime financial services industry executive, to the role. Johnson stepped down from that role in early 2018 before leaving the agency entirely in 2019 to wage a surprise, long-shot bid for Senate in Georgia on a platform of widespread student loan forgiveness.
James Manning, a longtime Education Department official and top aide to DeVos, served as the acting head of the office until Brown, an Air Force general with a 32-year career in the military, was appointed in March 2019.