Trump Education Secretary Nominee Is Indirectly Invested In Student Loan Company

It’s generally unwise for someone who works in government to have a personal investment in companies that could be affected by policies that he or she oversees, and that turns out to be the case for Betsy DeVos, President-Elect Trump’s nominee for Secretary of Education. Her investment in a company that refinances student loans is relatively small and indirect, but it exists, and is a potential conflict of interest.

The Wall Street Journal reports that DeVos and her husband have an estimated net worth of $5 billion, which is managed by a “family office,” or family-only investment firm, in their home state of Michigan. That firm, Windquest Group, is one of the investors in a venture capital firm called RPM Ventures. RPM, in turn, was one of the early investors in Social Finance, branded as SoFi, an online lender that to date has focused on refinancing student loans.

Under the Obama administration, there has been a push private student lending and prioritize lower-cost federal aid. SoFi operates by refinancing academic loans once those student borrowers are out of school and have jobs. Its business model is to offer refinancing at lower interest rates to students with higher incomes.

Whether this turns out to be a good long-term strategy, we don’t know, since the company is only five years old. It holds almost $8 billion in refinanced student loans.

The DeVos family owns very little of SoFi, with RPM Ventures owning only about 1% of the company, mostly having a role early on in getting the company launched and helping it to make contacts at colleges and universities.

It’s a highly symbolic conflict of interest, though, since the Department of Education could relinquish control of student loans under a new presidential administration. Critics of DeVos——who has no academic or professional experience in the education field ——have pointed to her previous actions advocating in favor of school choice and voucher systems, and against teachers’ unions and public schools.

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.