The Elizabeth Warren ally just picked to oversee US student loans could help make her debt-cancelation dream come true

Elizabeth Warren
Sen. Elizabeth Warren (D-MA).

  • Former CFPB head Richard Cordray will lead the Federal Student Aid office, which oversees student debt.
  • Elizabeth Warren helped create the CFPB and was key in nominating Cordray when she couldn’t helm the agency.
  • Warren wants to cancel $50,000 in student debt per person and Cordray has shared her agenda for much of his political career.
  • See more stories on Insider’s business page.

Since she was elected to the Senate almost a decade ago, Elizabeth Warren has been fighting to cancel student debt and hold loan servicers accountable. Now one of her closest allies is in charge of the federal student debt pile, and that could be a big deal.

Richard Cordray, the former head of the Consumer Financial Protection Bureau (CFPB), was selected to head the Education Department’s Office of Federal Student Aid (FSA) on Monday. Few people in Washington DC are better placed to carry out Warren’s vision of mass student-debt relief. That’s because Cordray took the job Democrats wanted Warren to have.

When Warren was a Harvard professor (and occasional blogger), she frequently cited problems within the student-loan system and the need to create something like the CFPB, which would protect consumers financially and ensures they are being treated fairly. That turned into a new federal agency created under President Barack Obama, who wanted Warren to lead it, but in 2011, Senate Republicans blocked her appointment. She ran for Senate instead, becoming a national figure, while Cordray became a close ally as the first head of the CFPB.

During her time in the Senate, Warren worked with Cordray’s bureau to conduct investigations into predatory lending practices. Now as head of the FSA, Cordray will be tasked with overseeing the government’s $1.5 trillion student loan portfolio through disbursing loans and grants, along with monitoring student-loan servicers and implementing relief and repayment programs.

@RichCordray was a fearless @CFPB leader who forced big financial institutions to return $12 billion to people they cheated,” Warren wrote on Twitter on Monday. “I’m very glad he’ll be protecting student borrowers and bringing much-needed accountability to the federal student loan program.”

AP21123748572443
Richard Cordray.

What Cordray could do on student debt

In a statement after his appointment was announced, Cordray said he was looking forward to creating “more pathways for students to graduate and get ahead, not be burdened by insurmountable debt.”

He will be tasked with sorting through claims from thousands of defrauded borrowers who filed for debt relief, along with ensuring the smooth implementation of loan collections once the pause on student loan payments through September is lifted – although Cardona said on Monday that extending the payment pause is “not out of the question.

While Cordray has not yet commented on wiping out $50,000 in student debt for each borrower, which Democrats continue to call for, he told MarketWatch last year that under the Biden administration, he expected the CFPB and the Education Department to work more closely on student-loan issues.

At the CFPB during the Obama years, Cordray made oversight of student loan servicers his priority. The agency has returned more than $75o million to student loan borrowers since 2011 over debt collection complaints, and in early 2017, the bureau sued Navient, the largest student loan servicer in the US, in a lawsuit that is still ongoing, arguing that Navient misled students into taking on loans they cannot pay off.

At a late April hearing, Warren called for the government to fire Navient, and for Navient to fire its chief executive officer, after accusing Navient for over a decade of abusing the student loan system.

In 2019, Cordray wrote a guest essay in The Plain Dealer, an Ohio newspaper, speaking out against for-profit colleges. “I hate how these hollowed-out businesses and subpar colleges are cheating consumers, employees and whole communities,” Cordray wrote.

Education Secretary Miguel Cardona has already canceled some debt for borrowers defrauded by for-profit schools, and Warren has conducted numerous investigations into the failures of the for-profits Corinthian Colleges and ITT Technical Institutes.

The FSA head’s seat has been vacant since March, when Mark Brown, former head of the office appointed by Education Secretary Betsy DeVos in 2019, resigned amid pressure from labor groups and lawmakers. Warren wrote in a tweet that his resignation was “good for student borrowers.”

Cordray told Marketwatch in November that, as CFPB head, his approach with the Education Department had been one of “close cooperation” but “that was all nixed when Betsy DeVos came into office.” Speaking of the outlook for a Biden administration, he said he thought the CFPB and Education Department would likely go back to working closely together.

Read the original article on Business Insider

15 major labor unions want Biden to cancel all student debt for public service workers, report says

joe biden
President Joe Biden.

  • 15 labor unions called on the DOE to fully cancel student debt for public service workers through executive action.
  • They cited problems with the Public Service Loan Forgiveness program, in which 98% of applicants were rejected.
  • This follows Biden’s request for the DOE to prepare a memo on his authority to cancel up to $50,000 in debt per person.
  • See more stories on Insider’s business page.

Student-debt cancelation was a major theme of the 2020 presidential campaign, and the issue is only gaining momentum. On Thursday, 15 of the largest labor unions in the country called on Education Secretary Miguel Cardona to fully erase debt for borrowers who have worked in public service for more than a decade.

According to a letter obtained by Politico, the National Education Association, the nation’s largest teachers’ union, led 14 other unions representing more than 10 million public service workers in calling for full student debt cancelation. The letter said the Public Service Loan Forgiveness program has been so mismanaged that 98% of applicants for the program were rejected.

“The COVID-19 pandemic underscores the need for immediate action,” the letter said. “Public service workers who should have already benefited from the Department of Education’s Public Service Loan Forgiveness (PSLF) program are serving on the front lines of our pandemic response – caring for patients, teaching our students, and delivering essential services in communities across the country.”

The letter, which was also signed by the Service Employees International Union and the American Federation of Government Employees, said the federal government has “fundamentally failed” public service workers because of difficulties in navigating the PSLF program.

To qualify for PSLF, a borrower must be employed by a federal, state, local, or nonprofit organization, work full-time, and have direct loans. However, a 2020 report from The American Federation of Teachers and the Student Borrower Protection Center found that due to poor communication from the DOE, only 1% of eligible borrowers were approved for loan forgiveness.

Democratic lawmakers have criticized Education Secretary Betsy DeVos’ oversight of the program, and in 2019, Sen. Elizabeth Warren of Massachusetts, along with other Democratic senators, wrote a letter to the Consumer Financial Protection Bureau requesting further information on PSLF oversight.

“Though one of the primary functions of the CFPB is to regulate the student loan industry, they have failed to adequately address these claims,” the letter said. “In particular, we are concerned that CFPB leadership has rolled back its supervision and enforcement activities related to federal student loan servicers. This suggests a shocking disregard for the financial wellbeing of our nation’s public servants, including teachers, first responders, and members of the military.”

Biden vowed to fix the PSLF program during his campaign, but given its mismanagement, unions want the DOE to use its emergency powers during the pandemic to carry out the loan forgiveness.

In terms of using executive authority, White House Chief of Staff Ron Klain said on Thursday that Biden asked Cardona to prepare a memo looking into his authority to cancel $50,000 in student debt through executive action, which follows Biden’s request to the Justice Department to review his authority to do so. Warren campaigned on the issue of canceling $50,000 per person, while Biden set a $10,000 figure and he has since been repeatedly pressured to revise that upward.

Cardona has already acted to cancel debt for about 72,000 borrowers defrauded by for-profit schools, along with over 41,000 borrowers with disabilities. He also expanded the scope of the pause on loan payments to apply to 1.14 million borrowers with private loans under the Federal Family Education Loan (FFEL) Program.

The DOE has not yet commented on the unions’ request.

Read the original article on Business Insider

Biden eyes trashing Trump-era rules that advocates feared would silence sexual assault survivors on college campuses

Betsy Devos
US Secretary of Education Betsy DeVos speaks as Vice President Mike Pence listens during a White House Coronavirus Task Force press briefing at the US Department of Education July 8, 2020 in Washington, DC.

  • Biden is directing the Education Department to review policies about sexual assault on college campuses.
  • The controversial policies were instituted under Trump by Betsy DeVos.
  • The president will direct the Education Department to determine if the rules mesh with his policies.
  • Visit the Business section of Insider for more stories.

President Joe Biden on Monday will sign an executive order directing the Department of Education to review policy changes concerning sexual assault on college campuses that were implemented under former President Donald Trump, asking officials to determine whether the policies align with his administration’s goals. 

According to The Washington Post, senior administration officials confirmed Sunday that Biden planned to sign an executive order on Monday that directed a thorough review of the rules implemented during the final year of the Trump administration. 

The move could be the start of the Biden administration’s attempt at replacing the rules with its own, according to the Post.

The changes, engineered by former Education Secretary Betsy DeVos, were widely denounced by progressives, women’s rights organizations, and other groups that advocate for survivors of sexual assault and harassment. DeVos first announced her intention to make the policy changes in 2018, but the rules weren’t finalized until last year.

The rules no longer permitted a single individual at a university or college to investigate and make a ruling concerning claims of sexual assault or harassment and instead required institutions to use a model where that allowed the accused person to cross-examine the accuser in a live hearing in a more judicial-style proceeding, according to Washington Post.

While proponents of the change said it gave accused persons more due process rights, critics feared it would discourage survivors from coming forward with allegations of assault or harassment. Colleges and universities that were required to make changes based on the rules also opposed the changes.

Democratic attorneys general in more than a dozen states filed a federal lawsuit last year opposing the new rules. The American Civil Liberties Union also last year sued to block the changes from taking effect, predicting the new rules could result in 32% fewer reports of sexual harassment and assault at four-year institutions.

The executive order is also expected to direct a review of other Education Department policies to “guarantee education free from sexual violence,” administration officials told The Washington Post.

Biden’s executive order comes on International Women’s Day, and the president is expected to take a number of other executive actions in honor of the holiday, including his establishment of a White House Gender Policy Council to combat systemic issues of equality for women both domestically and abroad, USA Today reported.

The Gender Policy Council will also focus on transgender issues and supporting women of color, according to the report.

The president is expected to unveil these orders during a speech later Monday.

Read the original article on Business Insider

Outgoing Secretary of Education Betsy DeVos urged against student loan forgiveness in letter to Congress

U.S. Education Secretary Betsy Devos speaks during a White House coronavirus disease (COVID-19) task force briefing at the U.S. Education Department in Washington, U.S., July 8, 2020. REUTERS/Carlos Barria
U.S. Education Secretary Betsy Devos speaks at White House coronavirus task force briefing at the Education Department in Washington

  • Outgoing Secretary of Education Betsy DeVos advised Congress to vote against student loan forgiveness, according to a letter obtained by CBS News and Politico.
  • “Across-the-board forgiveness of college debts is not only unfair to most Americans, it is also the most regressive of policy proposals – rewarding the wealthiest sector of our labor force at the expense of the poorest,” she wrote.
  • In the apparent farewell letter addressed to Senate Majority Leader Mitch McConnell, DeVos outlined a number of education policies, including allocating direct federal funding to students
  • Visit Business Insider’s homepage for more stories.

Outgoing Secretary of Education Betsy DeVos advised against student loan forgiveness in a letter sent to Congress Monday, which was obtained by CBS News and Politico.

In what appeared to be a farewell letter to Senate Majority Leader Mitch McConnell, DeVos reflected “on the past four years and the conversations we have had together” and shared some “closing thoughts” with the Kentucky senator.

DeVos outlined a number of talking points in the letter, including considering allocating direct federal funding to students.

“Let me urge you instead to provide for students the opportunity to pursue meaningful, challenging, and rewarding learning opportunities,” DeVos wrote. “Let me encourage you to fund education – that is, learning – not a Department of Education. Let me urge you to fund students, not school buildings.”

She also dismissed student loan forgiveness in the letter – a policy in which President-elect Joe Biden has expressed support during his upcoming term. Biden has previously proposed making undergraduate education free in some cases and expanding college federal loan programs. He also suggested giving student loan borrowers $10,000 in loan forgiveness as part of coronavirus relief.

Read more: What a Biden presidency could mean for America’s student-loan debt crisis

DeVos, in contrast, urged Congress to reject such a proposal.

“Importantly, I hope you also reject misguided calls to make college ‘free’ and require the two-thirds of Americans who didn’t take on student debt or who responsibly paid off their student loans to pay for the loans of those who have not done the same,” she wrote in the letter.

“Across-the-board forgiveness of college debts is not only unfair to most Americans, it is also the most regressive of policy proposals – rewarding the wealthiest sector of our labor force at the expense of the poorest,” she continued.

In December, DeVos extended student loan forbearance through the end of January. Previously, more than 40 million student loan borrowers in the US weren’t expected to make payments again until the end of 2020, setting up a complicated situation for both borrowers and the incoming Biden administration.

Though student loan forbearance is set to expire at the end of the month, the bipartisan $908 billion coronavirus relief package signed by President Donald Trump does not include additional forbearance. It is not immediately clear what the incoming Biden administration will do with regards to the policy from the time he is inaugurated on January 20 to its expiration date on January 31.

Read the original article on Business Insider