A senior student loan official in the Trump administration said he would resign today and endorse canceling most of the nation’s outstanding student debt, calling the student loan system “fundamentally broken,” the Wall Street Journal reported. A. Wayne Johnson was appointed in 2017 by Education Secretary Betsy DeVos as chief operating officer of the Office of Federal Student Aid, overseeing the $1.5 trillion student-loan portfolio. After seven months, he moved into a different role as chief strategy and transformation officer, leading a revamp of how the agency deals with borrowers and the companies that service the debt. Johnson said that repayment trends suggest much of the debt will likely never be repaid, and he is calling for moving toward a system that gets the government out of student lending. “We run through the process of putting this debt burden on somebody…but it rides on their credit files—it rides on their back—for decades,” he said, adding, “The time has come for us to end and stop the insanity.” Johnson said he arrived at his position to cancel student debt after he joined the administration and had a firsthand look at the problems, including the high level of defaults and the difficulties of administering a program to erase loans for public-sector workers. Read more. (Subscription required.)
In related news, a trove of documents released on Tuesday by the House Education and Labor Committee shows the Education Department provided $10.7 million in federal loans and grants to students at the Illinois Institute of Art and the Art Institute of Colorado, even though officials knew the for-profit colleges were not accredited and ineligible to receive such aid, the Washington Post reported. The documents build on prior reports from the committee describing efforts by Education Department officials to shield Dream Center Education Holdings, owner of the Art Institutes and Argosy University, from the consequences of lying to students about the accreditation of its since-closed schools. Now it appears the Education Department tried to shield itself from an ill-fated decision to allow millions of dollars to flow to those schools. Rep. Robert C. “Bobby” Scott (D-Va.), chairman of the House Education Committee, is threatening to subpoena Education Secretary Betsy DeVos for more documents related to the department’s role in Dream Center’s actions. Scott says that the agency has obstructed the committee’s investigation and refused to answer questions, as emails and letters paint a picture of a federal agency complicit in an effort to place profits before students. The agency defended its actions. “It seems to us that the chairman is cherry-picking facts and lacking important context,” said Angela Morabito, a spokeswoman for the Education Department. “The department maintains that it acted in the best interest of students and has continued to act in the best interest of students.” By law, for-profit colleges must be fully accredited to participate in federal student aid programs. Neither the Art Institute of Colorado, the Art Institute of Michigan or the Illinois Institute of Art in Chicago and Schaumburg held that seal of approval from their accreditor, the Higher Learning Commission, in the 2018 spring semester. In reviewing Dream Center’s 2017 acquisition of the chain, the accrediting commission raised concerns about the quality of education at the campuses and downgraded their status for up to four years. Read more.
