Yesterday, Congress held a confirmation hearing for Betsy DeVos, who is the nominee to head the U.S. Dept. of Education under the incoming Trump administration. If confirmed, DeVos would oversee the entire federal student loan disbursement, servicing, and collections system, which currently totals over $1.3 trillion and involves over 40 million individual student loan borrowers.
How will DeVos handle the student loan system? Here’s what we learned from the hearing (spoiler alert – not much):
- DeVos expressed skepticism about public education funding in general. This is unsurprising given her record of supporting private schools and charter schools.
- DeVos and her family have financial ties to several federal student loan debt collection agencies contracted with the Dept. of Education, as well as some private student loan refinancing companies (which regularly market to federal student loan borrowers). When asked about these potential conflicts of interest, DeVos demurred, simply stating that any conflicts “will be resolved.”
- DeVos seemed to show a lack of understanding about the federal student loan system in general (grossly misstating the growth of federal student debt), and the interplay between federal law and state law (incorrectly stating that certain education issues were purely state issues, even though federal law governs).
- DeVos expressed some support for for-profit and proprietary schools. This is a substantial contrast with the Obama administration, which has taken a tough approach towards predatory for-profit colleges resulting in the closure of some big-name campuses and new student loan forgiveness programs for defrauded students.
Overall, we didn’t learn any real specifics about how DeVos intends to address the student loan crisis. Furthermore, based on what she did say, I share some concerns expressed by several senators (including Senator Elizabeth Warren) that DeVos may lack the credentials, experience, and understanding necessary to oversee $1.3 trillion in student debt and over 40 million student loan borrower accounts. In particular, her ties to the debt collection industry and private student loan refinancing market are concerning, especially in light of the fact that she provided no specific plan to address these conflicts of interest.
We are entering into unknown territory, and the hearing provided little to dispel the post-election uncertainty about the student loan system. Stay tuned.
