Progressives escalate fight over Education Department student loan office

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Progressive activists are frustrated that President Joe Biden is not moving more quickly to scrap Trump-era Education Department policies on student loans and for-profit colleges, and they’re pressing his administration to be more aggressive.

Biden is under pressure from the left to cancel large swaths of outstanding federal student loan debt, a high-profile fight expected to blow up in the coming months. The new president has rejected the most far-reaching proposals, such as writing off $50,000 per borrower, but the White House has said it’s reviewing how to proceed on the issue.

In the meantime, progressives are escalating a more under-the-radar battle over how the Biden administration is managing the day-to-day operations of the federal government’s $1.5 trillion student loan portfolio and regulating student loan companies and for-profit education firms.

“New leadership in the White House and the Department of Education means there is an ample opportunity to transform and reinvigorate” the Office of Federal Student Aid, a coalition of groups wrote in a letter being sent to newly-confirmed Education Secretary Miguel Cardona and White House Chief of Staff Ron Klain on Monday. “To do so, DeVos appointees at FSA must be replaced by strong advocates of student borrowers’ interests.”

The progressive groups, led by Demand Progress Education Fund and the Revolving Door Project, outlines a range of concerns with who has been selected, or might be selected, for key roles overseeing student loans and investigations into colleges. Justice Democrats, the Progressive Change Campaign Committee, a group allied with Sen. Elizabeth Warren (D-Mass.), and Our Revolution, a group tied to Sen. Bernie Sanders (I-Vt.), are among the groups signing on to the letter, which was shared with POLITICO.

Progressives are raising a slew of issues: They view some key Education Department officials as insufficiently aggressive or too tied to corporate interests. The Biden administration has continued to defend DeVos-era policies on student loans and for-profit colleges in court. And the Education Department hasn’t yet taken steps to undo Trump administration restrictions on the amount of loan forgiveness for defrauded borrowers or rescind a legal opinion shielding student loan companies from state regulators.

Mark Brown, the DeVos appointee who had been serving as top student aid official, resigned earlier this month with more than a year left on his term, following weeks of pressure from consumer and labor groups as well as Warren. Brown’s departure clears the path for the Biden administration to appoint a new student aid chief.

Cardona immediately tapped Robin Minor, a longtime career official, to serve as the acting student aid chief. But progressive groups said that the appointment of Minor was disappointing. They said Minor, who is the office’s chief compliance officer, oversaw problems with student loan forgiveness claims and loan servicing in ways that went “against the interest of student borrowers.”

The progressive groups also criticized the administration for keeping Lisa Bureau, who reports to Minor and as the student aid office’s director of investigations, taking issue with her previous work at a law firm representing colleges dealing with Education Department regulatory issues.

Cardona said in a statement following Brown’s resignation that he wanted Federal Student Aid to “renew its focus on streamlining access to and management of federal financial aid, easing the burden of student debt and carefully stewarding taxpayer dollars.”

The Biden administration is searching for a permanent student aid chief, who is appointed by the education secretary for a several-year term and not subject to Senate confirmation. The job was once a relatively obscure government management post, but it has become increasingly politically contentious in recent years.

And the political jockeying over the next chief has already begun. Progressives are targeting a potential candidate for the job, Abigail Seldin, over her work for Education Credit Management Corporation, a widely-criticized student loan collection company that has also purchased troubled for-profit college campuses in a sale brokered by the Obama administration.

Seldin developed a college cost calculator that she sold to ECMC and became the firm’s vice president of innovation and product management. She now runs a charitable foundation focused on higher education equity and has discussed the job with Biden administration officials, according to a person familiar with the conversations.

Proponents of Seldin for the role say the criticism is unfair and that her work at ECMC was unrelated to its student loan business. She most recently funded an online tool to help college students petition their institutions for additional financial aid.

Beyond the personnel moves, the Biden Education Department’s positions in court on higher education issues have also drawn the ire of some liberals.

Last month, the Biden administration jointly filed a motion with DeVos’ personal attorney to fend off an attempt to compel the former secretary to testify in a class-action lawsuit over the Trump administration’s lengthy delays and sweeping denials of student loan forgiveness claims. The court filing, which was submitted by a Biden administration political appointee, said that the borrowers suing for loan relief had engaged in “harassment” and a “PR campaign.”

The Biden administration is also still defending lawsuits brought by Democratic attorneys general and other groups related to DeVos’ rollback of a rules aimed at cutting off federal funding to low-performing programs at for-profit colleges and other career schools and making it easier for students defrauded by their college to have their debts canceled.

And the Education Department hasn’t yet heeded calls from Democratic state officials to rescind DeVos-era policies, sought by the student loan industry, that declared federal student loan servicers off limits to state regulators and restricted investigators’ access to information about the companies.

“They should be moving faster — I know they just got a secretary but there’s so much that doesn’t rise to that level that they could be doing,” said Toby Merrill, director of Harvard Law School’s Project on Predatory Student Lending, which frequently sued the Education Department under the Trump administration, including several cases over a student loan forgiveness program for defrauded students known as borrower defense.

Merrill said she’s sympathetic to the decimation of staff at the department over the past four years and recognizes the slow pace of government rule-making. But she said that she would hope the department would change its approach to how it handles individual claims for loan forgiveness, for example, which wouldn’t need a new regulation. “It’s unbelievably outrageous that a whole list of policies and easy-to-change positions persist,” she said.

Merrill’s group has urged the department to completely erase the debts owed by former students of Corinthian Colleges and ITT Tech, two massive for-profit colleges that collapsed during the Obama administration. “We’ve got to push from the get-go because we don’t have time to wait for the new administration to do the right thing,” she said.

Education Department spokesperson Kelly Leon said the administration is focused on assisting student loan borrowers. “Helping students access federal aid and protecting student borrowers are critical parts of the Department’s mission and ones the Department takes seriously,” Leon said in a statement. “The agency will continue looking for ways to best fulfill these priorities.”

The complaints from the left of the Biden administration’s early handling of student loan issues stands out because progressives have largely praised much of Biden’s approach over the past several months, including his passage of the sweeping $1.9 trillion Covid relief law.

But it also comes as the Education Department’s student aid office braces for a series of major tasks in the coming months — even before any new administration policy prerogatives.

The unit will be in charge of hammering out new contracts with loan servicing companies to collect federal student loan payments. It will be tasked with a Congressionally-ordered major overhaul and redesign of the Free Application for Federal Student Aid. And more immediately, the office will be responsible for managing the unprecedented restart of monthly loan payments for some 40 million Americans who are benefiting from pandemic relief that Biden has extended until Sept. 30.

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