DeVos Hires For-Profit College CEO to Run $1.3T Federal Student Loan Program

DeVos Hires For-Profit College CEO to Run $1.3T Federal Student Loan Program

Susanne Posel ,Chief Editor Occupy Corporatism | Host of Hardline Radio Show

The Department of Education under Betsy DeVos has hired the CEO of a student loan corporation to head the $1.3 trillion federal student loan program for the Trump administration.

A. Wayne Johnson is the founder, chairman and former head of First Performance Corporation has hired the CEO of a student loan and currently CEO of Reunion Financial Services (RFS), a company that offers students refinancing on their existing loans for a considerable fee.

In an education department statement, DeVos said Johnson “will bring a unique combination of CEO-level operating skills and an in-depth understanding of the needs and issues associated with student loan borrowers and their families.”

This move comes on the heels of last week’s announcement that DeVos is suspending rules put forth by President Obama allowing students to obtain loan forgiveness with regard to for-profit colleges.

DeVos proclaimed it is “time for a regulatory reset” because “last year’s rulemaking effort missed an opportunity to get it right.”

The secretary of education accused the Obama administration’s efforts to help students with unpaid debt “a muddled process that’s unfair to students and schools and puts taxpayers on the hook for significant costs.”

But what the Trump administration is doing by suspending these rules makes it more difficult for students to obtain loan forgiveness in situations where they were defrauded or deceived by the college they owe money to.

In addition, the rule suspension removes limitations on the amount of debt students at career-training schools can incur. And in turn, those schools are no longer going to be penalized by the government for exceeding those previous limitations.

Going back to 2016, the Consumer Financial Protection Bureau (CFPB) was cracking down on for-profit colleges. Bridgepoint Education and their subsidiary Ashford University (AU) were accused of “deceiving students into taking out private student loans that cost more than advertised.”

Nearly a decade ago, Bridgepoint offered in-house private loans to students which the company then used the proceeds on the stock market because this entity is publicly traded. To ensure cash flow, Bridgepoint misled students as to the total costs of attending AU.

The CFPB ordered Bridgepoint to forgive all outstanding student loans and refund monies paid by borrowers. In total $ 23.5 million is expected to be repaid to 1,277 students. The organization will also pay $8 million in fines.

And in 2016, the education department under Obama announced a crackdown on for-profit higher education schools, starting with ITT Educational Service, Inc (ITT).

This oversight investigation was initiated by the Accrediting Council for Independent Colleges and Schools (ACICS) who asked the government to look at ITT for its failure to live up to the demands of accreditation. This fact is expected to close ITT’s 137 campuses and provide a pathway for student debt forgiveness for tens of thousands of students.

ITT did not set aside funding to off-set this reality and in response the education department put its full weight against the school. Changes at the education department meant that ITT was no longer allowed to enroll new students who use federal loans or grants to pay tuition. In addition, ITT executives cannot give themselves bonuses or payout severance without first gaining governmental approval.

ITT was forced to abide by other restrictions, such as providing a letter of credit from banks loaning to ITT to show the school has the $247 million necessary to counter federal student-aid liabilities. Ultimately, ITT closed their doors, leaving students in limbo concerning their debt and access to continued education.

Susanne Posel

Susanne Posel

Chief Editor | Investigative Journalist

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