DeVos Wants a New Banker

By The New England Council

DC Shuttle …

DeVos Calls for Federal Student Aid Office to Spin Off into a New Agency. U.S. Education Secretary Betsy DeVos pitched a proposal for federal student loans to be operated by “a stand-alone government corporation, run by a professional, expert and apolitical board of governors,” instead of by the Education Department’s Office of Federal Student Aid. At the department’s annual conference, DeVos told the crowd, “Congress never set up the Department of Education to be a bank nor did it define the secretary of education as the nation’s ‘top banker.'” House Education Committee Chair Bobby Scott (D-VA), however, did not give a warm welcome to the idea. “The Federal Student Aid office should already be putting students at the center of its work and should already be free from political whims,” he said in a statement. “The department should focus its time and resources on implementing the existing student loan programs in good faith. There’s nothing that could be done with a new agency that can’t be done today.” Read more in Politico and The Washington Post.

Ed Department Reveals It Erroneously Collected Additional Corinthian College Loans. The Education Department revealed a court filing identifying an additional 29,000 former Corinthian College students who were pursued for federal loan payments despite a court order halting collection. In October, a federal judge held DeVos in contempt of court for erroneously collecting the loans of nearly 16,000 Corinthian borrowers and fined the department $100,000. According to the department, 45,801 student loan borrowers continued to have their loans wrongly collected. The court filing shows that of the newly identified 29,000 students, 550 lost wages or tax refunds due to the mistaken loan collection, and 5,000 were hit with negative marks on their credit reports. In the court filing, the department claims that a more thorough review of the issue “revealed that an isolated miscommunication between the [Federal Student Aid office] and its loan servicers and other logistical issues cause this underestimate in the number of impacted borrowers.” Read more in The Washington Post.

Ed Department Plans New Pilot Program on Student Loans. The Department of Education detailed its plan to roll out a new pilot program to give colleges the power to limit the amount of money their students can borrow from the federal government and allows schools to use federal student loans to fund private financing products or income-share agreements. The department will use its experimental sites to test if the program will help “responsibly limit borrowing and student debt” while also shifting the part of the risk of student loans from the government onto universities. Read more in Politico.

Senate Passes Bipartisan Amendment to Restore Funding to HBCUs. The Senate passed a bipartisan amendment that would permanently restore $255 million in annual funding for historically black colleges and universities (HCBUs), tribal colleges and universities (TCUs) and other minority-serving institutions (MSIs). The proposal amends the FUTURE Act and ties the funding to the passage of the FAFSA Act, which would save an estimated $2.8 billion over 10 years by simplifying the application process for federal aid and reducing paperwork for borrowers on income-driven repayment plans. The amendment includes several proposals, such as removing up to 22 questions from the FAFSA, reducing the number of students chosen for verification (a complicated process to prove they provided the Department of Education with the same information they gave to the IRS) and eliminating part of the paperwork for 7.7 million students on income-driven loan repayment plans. However, the amendment is expected to face opposition in the House, which passed the FUTURE Act two weeks before the MSI funding expired in late September. Several Ways and Means Committee members, who are critical to moving the amendment to the floor, have expressed concerns that the FAFSA Act could put students’ data and privacy at risk. Read more in The Washington Post and Education Dive.

House Panel to Hold Hearings on Borrower Defense. The House Committee on Education and Labor announced it will hold a hearing on “Examining the Education Department’s Implementation of Borrower Defense” on Thursday, Dec. 12.

We publish the DC Shuttle each week featuring higher ed news from Washington collected by the New England Council, of which NEBHE is a member. This edition is drawn from the Higher Education Update in the Council’s Weekly Washington Report of Dec. 9, 2019. For more information, please visit:

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