Betsy DeVos should resign as Education Secretary and Trump should replace her with a junkyard dog

Betsy DeVos should resign as Secretary of Education in the Trump administration. I say this for two reasons:

First, Ms. DeVos is too nice a person to be President Trump's Secretary of Education.

No matter what you think of her politics or her education philosophy Betsy DeVos is not a toxic person. She did not deserve to be shut out of a public school, as District of Columbia protesters tried to do shortly after she took office.

And she did not deserve to have students boo her and turn their backs on her when she spoke at a college graduation exercise this spring. If I were her, I would tell the whole wide world to stick the Secretary of Education's position where the sun doesn't shine and go home to Michigan and spend time with my grandchildren.

Second. Betsy DeVos knows next to nothing about higher education policy.

The federal student loan program is in meltdown, destroying the lives of millions of people and undermining the integrity of higher education. Numerous small private liberal arts colleges are on the verge of closing; law schools are admitting students of a lower and lower quality, and huge swaths of the for-profit college industry are defrauding their students--or, at the very least, they are gouging their customers. The federal student loan program bears a big share of the blame for this dismal state of affairs.

Betsy DeVos knows next to nothing about the student loan crisis. She has shown no capacity to deal with this enormous problem, and she has already made a number of missteps. For example, she hired some empty suits from the for-profit sector to advise her--the wrong move, in my opinion.

Trump needs to hire a junkyard dog to run the Department of Education

President Trump needs to gracefully accept DeVos' resignation, praise her extravagantly in a tweet message, and then appoint a junkyard dog to replace her.

By junkyard dog, I don't mean a vicious person or an unethical person; I mean a tough person.  The next Education Secretary needs to be tough enough to confront the for-profit college industry, tough enough to handle higher education's legions of lobbyists, and tough enough to get rid of the student loan guaranty agencies that have amassed billions of dollars in cash hounding distressed student loan debtors.

The next Secretary of Education needs to be tough enough to tell the public the truth about the student loan crisis, which is this: Millions of people have taken out student loans they will never pay back.

What a junkyard dog do if  appointed Education Secretary?

• First, the Consumer Financial Protection Bureau's 2013 report, A Closer Look at the Trillion, needs to be updated. How many people have defaulted on their loans, and how many are delinquent? How many are not making payments because their loans are in deferment or forbearance? How many are in income-driven repayment plans (IDRs) and making monthly payments so low that their payments don't cover accruing interest?

• Second, the new Secretary should endorse the Democrats' bill to protect student loan defaulters from having their Social Security checks garnished.  This is a small matter in terms of the overall student loan crisis, but symbolically, such a move would signal that the Trump administration is not completely heartless.

• Third, the Education Secretary should cancel the performance bonus program for DOE's student-loan bureaucrats. James Runcie, Chief Operating Officer for the student loan program, received $430,000 in bonuses--an outrage. The new Secretary of Education should fire everyone who got a performance bonus.

• Fourth, the DOE Secretary needs to streamline the process whereby students who file administrative claims based on the closed-school rule or the so-called borrower defense can have their claims resolved quickly.

• Fifth, DOE's junkyard dog should dismantle all the student loan guaranty agencies, starting with Educational Credit Management Corporation. While the termination process is taking place, DOE should stop paying the agencies' attorney fees to hound suffering student borrowers in the bankruptcy courts.

• Sixth, the Secretary of Education, as junkyard dog, should revise Lynn Mahaffie's 2015 letter outlining when DOE will not oppose bankruptcy discharge of student loans to clarify to the federal courts that DOE supports a bankruptcy discharge of student loans under the same terms that apply to other unsecured consumer debt.

Obviously, any Secretary of Education who attempts to carry out the agenda I outlined will need to be tough as a junkyard dog. Betsy DeVos is not a junkyard dog, and I mean that as a compliment to her.

The next Secretary of Education should be a junkyard dog.

References

Lauren Camera. Protesters Disrupt DeVos School Visit. U.S. News & World Report, February 10, 2017.

Rohit Chopra. A closer look at the trillion. Consumer Financial Protection Bureau, August 5, 2013.

Erica L. Green. Bethune-Cookman Graduates Greet Betsy DeVos With Turned Backs. New York Times, May 10, 2017.

Department of Education executives pay themselves cash bonuses while federal student loan program goes to hell

At last the secret is out. The federal student loan program is out of control and millions of borrowers cannot pay back their loans. As the New York Times pointed out recently, student debtors are defaulting at an average rate of 3,000 a day--more than a million people went into default last year alone.

But the Department of Education hacks who oversee the student loan program have been paying themselves performance bonuses. James Runcie, Chief Operating Officer for DOE's student loan program, received $433,000 in bonuses; and then he resigned rather than testify before the House Oversight Committee about what the heck was going on in the student loan program.

And Runcie was not the only DOE executive to get bonuses. The National Association of Student Financial Aid Administrators (NASFAA) released a report earlier this month that provides some useful information about how DOE's bonus program works.

As the NASFAA report explains, the Federal Student Aid Office (FSA) set performance goals for the organization  and then basically assessed itself with regard to whether the office met those goals. According to NASFAA, "self-assessments are a common way to begin performance evaluations, but they are usually signed off on by a person or board with oversight responsibility."  The Federal Student Aid office, however, let its own evaluations stand "without pushback, oversight, or accountability, which often easily allows the organization to excuse away failure to meet goals and targets."

FSA's self-assessment program permitted senior executives to get bonuses if they excelled at their work. The program identified three categories of performance: "exceptional," "high results," or "results achieved." Note that there was not even a category for poor performance.

Senior people who scored "exceptional" or "high results" were eligible for bonuses; and not surprisingly, performance scores got higher and higher as the years went by. In FY 11,  "66 percent of  senior FSA leaders received an "exceptional" or "high results" performance rating that qualified them for bonuses. In FY 2015, 90 percent of senior administrators got those ratings.

Correspondingly, the percentage of eligible employees who only scored "results achieved," making them ineligible for bonuses, decreased from 34 percent to only 10 percent between FY 2011 and FY 2015.

Bottom line is this: In FY 2015, 89.8 percent of FSA senior administrators ranked high enough to get a cash bonus, and 89.8 percent of those administrators got cash bonuses. How big were the bonuses? I haven't seen a list showing bonus amounts and who got them. Huffington Post reported that that at least one bonus was $75,000.

No wonder Mr. Runcie resigned rather than answer questions before the House Oversight Committee. "I cannot in good conscience continue to be accountable as Chief Operating officer given the risk associated with the current environment at the Education Department," he is quoted as saying.

What the hell does that mean?  I have no idea. It must be one of those phrases Mr. Runcie learned when he was getting his MBA at Harvard.

James Runcie testifying about the student loan program

References  

Danielle Douglas-Gabriel. It's time to reform the financial arm of the Education Department, report says. Washington Post, May 16, 2017.

Adam Harris. Top Federal Student-Aid Official Resigns Over Congressional Testimony. Chronicle of Higher Education, May 24, 2017.

Shahien Nasiripour. Education Department Secretly Reappoints Top Official Accused of Harming Students. Huffington Post, May 7, 2016.

National Association of Student Financial Aid Administrators. Improving Oversight and Transparency at the U.S. Department of Education's Financial Aid: NASFAA's Recommendations. (May 2017).

The Wrong Move on Student Loans. New York Times, April 6, 2017.

James Runcie, Chief Administrator of DOE's Federal Student Aid Program, resigns rather than testify before Congress. Will he take his bonuses with him?

James Runcie, Chief Operating Officer for the Department of Education's Student Aid Office, resigned a few days ago rather than testify before the House Oversight Committee. Good riddance!

Runcie, who has an MBA from Harvard, was appointed to the COO's position by the Obama administration in 2011. In December 2015, Secretary of Education Arne Duncan secretly reappointed Runcie to the position just before  Duncan stepped down as Education Secretary. In fact, Runcie's reappointment was one of Duncan's last official acts.

The Runcie-supervised student aid program has come under severe criticism over the last several years.   Recently, the press reported that the program misspent a total of $6 billion in federal money in the Pell Grant program and the Direct Student Loan program. A Huffington Post article, published about a year ago, noted that "government investigators from other agencies routinely slammed Runcie's division for failing to aid distressed borrowers and protect students, or they unearthed evidence of mistreatment that Runcie's deputies missed."

In fact, reports from multiple sources make clear that the Federal Student Aid office is a mess. The Government Accountability Office reported in December that DOE had underestimated the cost of its income-driven repayment programs. GAO concluded that the true cost was about double what DOE estimated.

And in Price v. U.S. Department of Education, decided recently by a Texas federal court, we got a glimpse of how poorly DOE responds to student complaints. Phyllis Price, filed an administrative complaint seeking to have her student loans discharged because the University of Phoenix, the school she attended, had falsely certified that she had a high school diploma.  DOE took six years to resolve Price's claim, and then it got it wrong. Price had to sue the Department to obtain the relief to which she was clearly entitled under federal law.

But sloppy administration did not prevent James Runcie and his close cronies from getting big salaries and handsome performance bonuses. As the Huffington Post reported, the typical Federal Student Aid employee makes more than $100,000, about a third more than typical federal employees are paid.

Runcie himself got a lot of bonus money. Just a few days ago, U.S. Congressman Jim Jordan (R-Ohio), accused Jordan of receiving $433,000 in performance bonuses while working for DOE!

Just think how big his bonuses would have been had he performed his job competently?

I hope the House Oversight Committee orders Runcie to appear under subpoena and explain what the hell he was doing while he was in charge of the Federal Student Aid program.

It is probably impossible to get Runcie's bonus money back, but surely Congress can stop the Department of Education's practice of giving cash bonuses to people overseeing the federal student loan program--a program that has brought so much misery to millions of Americans.

Will Mr. Runcie return his bonus money?

References

Sabrina Eaton. Rep. Jim Jordan blasts student loan official's $433,000 in bonuses despite failing grades. Cleveland.com, May 25, 2017.

Andrew Kreigbaum. GAO Report finds costs of loan programs outpace estimates and department methodology flawed. Inside Higher Ed, December 1, 2016.

Christopher Maynard. Education Department blasted over $6 billion in improper student aid payments. consumeraffairs.com, May 26, 2017.

Price v. U.S. Dep't of Education, 209 Fed. Supp. 3d 925 (S.D. Tex. 2016).

Shahien Nasiripour. Education Department Secretly Reappoints Top Official Accused of Harming Students. Huffington Post, May 7, 2016.

Top Federal Student-Aid Official Resigns Over Congressional Testimony. Chronicle of Higher Education, May 24, 2017.

US. Government Accounting Office. Federal Student Loans: Education Needs to Improve Its Income-Driven Repayment Plan Budget Estimates. Washington, DC: U.S. Government Accounting Office, November, 2016.