Betsy DeVos To Put $1.3 Trillion Student Aid Office In Hands Of Exec From For-Profit Student Loan Company

Image courtesy of (tomQ)

The top official at the federal Office of Financial Aid recently resigned after butting heads with new Education Secretary Betsy DeVos and her plan to make sweeping changes to federal student loan programs. Now DeVos has announced a replacement who is more likely to follow her lead: Dr. A. Wayne Johnson, the CEO of a private, for-profit student loan company.

DeVos announced Tuesday the intent to appoint Dr. Johnson as Chief Operating Officer of the $1.3 trillion Federal Student Aid office.

While the Department’s announcement touted Johnson’s focus on student loans, including a book he wrote on student loan debt and his research related to “indebtedness decision-making,” it left out two very pertinent aspect of his resume: His work as CEO at Reunion Financial Services and, like DeVos, a lack of experience in public education.

The Chattanooga Times Free Press reported on June 6 that Johnson was a finalist to be the superintendent of Hamilton County Schools.

The paper notes that while Johnson’s resume detailed the companies he’s founded and the work he’s done in the banking and credit industry, it points out that he doesn’t have experience working in public education. It should be noted that Johnson did receive a PhD in Higher Education Leadership from Mercer University.

DeVos’s announcement touts Johnson as the founder and former CEO of First Performance Corporation, a global payment card technology platform company, but omits his current job as CEO of student loan company Reunion Financial Services.

According to Reunion’s website, Johnson founded the company, which originates and refinances student loans, after his research into university financing “opened his eyes.” The company claims to assist student loan borrowers who have “graduated and are working in their chosen profession, but are struggling financially because of the monthly payment burden associated with obtaining their degrees.”

“Through its founder’s experience in the unsecured consumer finance industry, Reunion has developed proven and proprietary processes which allow for a fast, smooth and efficient refinancing experience,” the company’s website states.

It’s unclear the terms of the refinancing options offered by the company.

DeVos said in a statement that Johnson is the “right person to modernize FSA for the 21st Century.”

DeVos didn’t elaborate on how the Department plans to modernize the Financial Student Aid office, but since she was confirmed as Education Secretary she’s made 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

Last month, she also revealed the agency’s 2018 budget, which included cuts to federal student loan repayment and loan forgiveness programs, among other things.

Johnson would replace former chief operating officer of the Office of Federal Student Aid James Runcie, who abruptly stepped down in late May.

At the time, Department spokesperson Liz Hill told 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 the 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.