Jacques: DeVos suggests making Federal Student Aid a 'standalone' entity
U.S. Education Secretary Betsy DeVos has consistently said she’d be happy if she could work herself out of a job. Her latest target: the Federal Student Aid office, an “untamed beast" she says is in "distress."
Loans shouldn’t be political, but they have increasingly become so, given Congress’ and past administrations' meddling in student aid. DeVos says this constant churn is complicating the process and adding confusion for borrowers — and liability for taxpayers. She thinks her department should get out of the banking business.
In a speech Tuesday at the Federal Student Aid Training Conference in Reno, Nevada, she challenged the role the Education Department should be playing in the student loan business.
According to a transcript of DeVos’ speech, she posed this question: “One has to wonder: Why isn’t FSA a standalone government corporation, run by a professional, expert, and apolitical Board of Governors?”
The Obama administration greatly expanded the federal government’s role in loans by making the government a direct lender, in addition to easing repayments and broadening loan forgiveness. Yet the government has long guaranteed students loans.
The office of Federal Student Aid oversees more than $1.5 trillion in outstanding loans to 42 million borrowers, and as DeVos points out, that portfolio makes FSA one of the country’s biggest consumer lenders.
“Congress never set up the U.S. Department of Education to be a bank, nor did it define the Secretary of Education as the nation’s ‘top banker,’” DeVos said in her speech. "But that’s effectively what Congress expects based on its policies."
It shouldn’t come as a surprise that DeVos and the Trump administration are trying to walk back some of those measures.
DeVos has received significant pushback for some of her actions related to student loans, specifically in regard to how lenient the federal government should be in granting loan forgiveness to students who attended for-profit colleges that have gone out of business or failed them in some other way.
The education secretary thinks the government must find a balance between offering students who really deserve it some relief, while protecting the taxpayers who are on the line when students don’t pay back their debts.
Neal McCluskey, director of the Cato Institute’s Center for Educational Freedom, is skeptical that relocating the student aid office would make a meaningful difference. Rather, he says the federal government should phase out its involvement in student lending altogether, starting with loan programs that aren’t targeted to families most in need. Multiple loans are available to borrowers regardless of their income.
This wide availability of loans and other aid has contributed directly to the skyrocketing costs of college, making the federal government complicit in the student debt burden facing so many Americans.
DeVos deserves credit for bringing attention to the inherent problems with government-run student aid.
Her latest comments fit in with her belief that education in this country would be better off if the federal government walked back its role. And she has promised to streamline the 3,600-member department.
While her hands are tied from making unilateral overhauls to the department — she needs Congress for more sweeping changes — DeVos has started amplifying the use of her bully pulpit. Earlier this year, for example, she advocated a $5 billion education tax credit program that would offer states more flexibility in fashioning school choice programs.
DeVos’ vision for student aid is worthy of consideration.
“President Trump and this administration are committed to transforming Federal Student Aid for students,” she said. “Congress needs to come alongside us to make this happen.”