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Mark Brown, the head of the office overseeing the government’s student loan portfolio, resigned Friday after urging the Biden administration to remove Brown, who was appointed by former Education Secretary Betsy DeVos.
Education Secretary Miguel Cardona said in a statement Friday morning that he had accepted Brown’s resignation from the position of chief operating officer of the Office of Federal Student Aid. In the statement, Cardona also pointed out his priorities for the office and higher education, as well as student debt in a broader sense.
“Under my leadership, the Department of Education will work to strengthen the college as a reliable avenue to access the middle class while protecting students and borrowers,” Cardona said in the statement. “Serving our nation’s students, the Department of Student Grants will once again focus on streamlining access to and management of federal grants, reducing student debt, and carefully managing taxpayers’ money.”
$ 1.5 trillion in federal student loans
Though unknown, the Federal Student Aid Office is critical to the student loan experience of borrowers. The office oversees the government’s $ 1.5 trillion student loan portfolio and is responsible for paying out loans and grants made to schools on behalf of students, overseeing the companies that collect borrowers’ student loan payments, for the implementation of aid and repayment programs and more.
MarketWatch reported in January that Senator Elizabeth Warren, a Massachusetts Democrat, was calling for the office to be re-headed. Borrower stakeholders have also said that Brown should be replaced.
In a statement released Friday, Warren said Brown’s resignation was “good for American borrowers,” adding that she looked forward to “working with Secretary Cardona to reform the FSA to work for student borrowers, rather than for large companies that provide student loans. ”
Brown was appointed by DeVos in 2019 and had some time left in his five-year tenure. The head of the FSA will not necessarily be ousted by a change in administration, but Brown’s tenure, coupled with the crucial role the head of the FSA will play in changes to student loan policy, had critics shy of an ongoing DeVos executive officer that Office under the administration of Biden.
Under the leadership of Mark Brown, the FSA had been plagued by challenges encountered in performing its required duties.
Under Brown’s leadership, the FSA had been plagued by challenges in performing its assigned tasks, which are often operationally complex and also represent high demands on borrowers. Months after the CARES act shut down student loan payments and collections, the agency sought to shut down the wage garnishment system.
The National Student Legal Defense Network and National Consumer Law Center sued the Department of Education over the problem, and even in August – a few months after the coronavirus-era payment hiatus – thousands of borrowers continued to be seized with their paychecks.
Although the pandemic and the economic relief efforts required to stop it came as a surprise, several months before COVID-19 became a national emergency, FSA officials knew they were struggling to control the unwieldy student loan system.
DeVos held in contempt of the court
In October 2019, a federal judge despised DeVos in court after the ministry’s hired student loan service providers continued to charge and confiscate wages and tax refunds from fraudulent borrowers despite a court order to stop them. In a video statement released on the day of the judgment, Brown said the agency had “taken full responsibility” for the problem.
The FSA faced management challenges prior to Brown’s takeover. Brown became the third person to head the office since 2017. In May of this year, James Runcie, who had been appointed to the position during the Obama administration, stepped down three years early and wrote in a letter to Washington Post staff that he was “incredibly concerned about significant restrictions being imposed about our ability to allocate and prioritize resources, make decisions, and fulfill the company’s mission. ”
DeVos replaced Runcie with A. Wayne Johnson, a former private student loan and credit card manager who was replaced by Brown in March 2019 and eventually left the agency in October of that year, calling for the student loan to be canceled on his way out.
With Brown’s resignation, Robin Minor, the assistant chief operating officer for partner involvement and oversight, will serve as acting chief operating officer, Cardona said in the statement.
Stakeholders are distributing the names of at least two candidates to replace Mark Brown.
Stakeholders are handing out the names of at least two candidates to permanently replace Brown, HuffPost reported Thursday. The Department of Education had no information to share beyond Cardona’s testimony of the new leadership of the office on Friday.
One of them is Mark Kaufman, the chief executive officer of the Neighborhood Impact Investment Fund, a nonprofit that works with the City of Baltimore and private partners to fund housing, commercial, and other developments in historically deprived neighborhoods.
Kaufman previously served as an advisor to Assistant Secretary of the Treasury Sarah Bloom Raskin during the Obama administration and as Maryland’s Commissioner of Financial Regulation. Borrower advocates have praised Bloom Raskin’s approach to the student loan problem. During her tenure, she highlighted the challenges in the student loan market, including with service providers who are the primary point of contact for borrowers for the repayment of their student loans and are overseen by the FSA.
The other, Abigail Seldin, is the executive director of the Seldin / Haring Smith Foundation. Since its inception in 2019, the organization has funded and organized projects related to student parents, students with basic needs and others. Last year, the organization launched Swift Student, a free tool that enables students to fill out letters that they can send to their schools requesting changes to their grant packages. These appeals became particularly important during the pandemic as student finances changed as a result of the downturn.
Before starting the foundation, Seldin created a tool called College Abacus that would allow users to compare the real price they would pay for college – information that is hard to come by – based on financial and other information they are in entered the tool.
In 2014, College Abacus was bought by Education Credit Management Corporation, an organization that was undergoing a review of its student debt collection practices. After the sale, Seldin was Vice President, Innovation and Product Development at ECMC for approximately two years.
The daunting task lies ahead
Regardless of who becomes head of the FSA, they face a daunting task. Student loan payments and collections are due to resume in October, and the head of the FSA will be instrumental in ensuring the payments system is smoothly re-powered and borrowers don’t fall into arrears. The Department of Education is also in the process of overhauling the student loan management system overseen by the FSA.
In addition, if the Biden government is to keep many of its election promises to optimize the student loan system, it needs the help of the FSA and its leadership to deliver them successfully.
For example, administrative officials have stated that they want to reform the PSLF and expand income-based repayment to allow borrowers to repay their debts as a percentage of their income.
Borrower advocates have also urged the administration to step up enforcement by nonprofit colleges and streamline debt relief for borrowers with disabilities and those whose schools have unexpectedly closed – tasks that also require the cooperation of the FSA.