Head Of $1.3 Trillion Federal Student Aid Office Resigns Amid Tension With Betsy DeVos

New Education Secretary Betsy DeVos is making sweeping changes to federal student aid programs, like taking away protections from borrowers and putting all loan servicing in the hands of one private firm. Now the top official at the Office of Financial Aid has resigned after reportedly butting heads with DeVos and warning his colleagues concerns with the Department’s management.

The Department of Education announced Wednesday that James Runcie, chief operating officer of the Office of Federal Student Aid, had submitted his resignation Tuesday evening, just hours after DeVos revealed the agency’s request for the 2018 budget, which included cuts to federal student loan repayment and loan forgiveness programs, among other things.

“James Runcie, Chief Operating Officer of the U.S. Department of Education Federal Student Aid, submitted his resignation to the Department last night,” the Department’s announcement states. “His resignation is effective immediately.”

Runcie had been overseeing the government’s $1.3 trillion student loan portfolio since 2011. He will be replaced, at least for now, by Matthew Sessa, deputy chief operating officer of FSA.

Department spokesperson Liz Hill tells the Washington Post that Runcie’s resignation came after he refused to testify before the House Oversight and Government Reform Committee about the handling of improper financial aid payments.

However, an email sent by Runcie to Department staff — and obtained by the Post — suggests that he simply declined to testify at Thursday’s planned hearing because there was someone more qualified to do so: Jay Hurt, the chief financial officer for FSA.

He notes that under different circumstances he would have agreed to testify but other matters at the Department needed more immediate attention, such as weighing the new one-servicer student contract, assisting with loan forgiveness to defrauded students, and increasing cybersecurity measures, including restoring the FAFSA tax-retrieval tool that was compromised.

“I am incredibly concerned about significant constraints being placed on our ability to allocate and prioritize resources, make decisions and deliver on the organization’s mission,” Runcie wrote, adding that dozens of decisions that the office would have typically already made are now in limbo because they must be elevated to the top of the Department.

This, Runcie wrote, has made the “framework and process” unclear to anyone at FSA and “the cycle time continues to increase risk for our work streams and stakeholders.”

Rather than focusing on current issues within FSA, Runcie said the administration has been working to transfer some of the office’s functions to the Treasury Department. It’s a move, he told staff, that could provide some value but “will certainly divert critical resources and increase operational risk in an increasingly challenging environment.”

In the end, Runcie wrote in the letter that he just wasn’t able to do his job anymore and could not “in good conscience continue to be accountable as the chief operating officer given the risk associated with the current environment at the department.”

The Post, citing officials within FSA, reports that Runcie was planning to retire later this year, but even knowing that, his early departure was still a surprise for many.

Hill, the department spokesperson, tells the Post that the administration is aware of a “litany of unsolved problems” facing the FSA, and that DeVos looks forward to finding a highly qualified candidate to effectively lead the office.

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