Former Trump student loans official calls for radical system overhaul

A former senior federal student loan official in the Trump administration has said the system he oversees needs to be scrapped and replaced.

A. Wayne Johnson, who is now running as a Republican for a Senate seat in Georgia after stepping down in November 2019, wrote a letter urging the Senate to consider key reforms to the student loan mechanism as part of the negotiations on the stimulus package amid the ongoing coronavirus pandemic.

The former chief operating officer of the Federal Student Aid (FSA) suggested three ideas: Amend the law to allow the discharge of student loans in bankruptcy “without undue hardship” if the debt is more than 10 years old , removing all federal student loan information from borrowers’ credit bureaus records, extending the payment break that President Donald Trump signed this weekend until December 31, 2021.

Johnson, appointed by Education Secretary Betsy DeVos in 2017, added that debt cancellation at that time was “inappropriate” – that is, until the system itself. even be dismantled: “I am of the opinion that the cancellation of the federal student loan debt should only be carried out at the same time as the abolition of the current Federal Student Loans Program.

A. Wayne Johnson. (Credit: A. Wayne Johnson)

The American dream … has turned into a great American nightmare ‘

Although there are signs of the economy recovering, as the number of new unemployment insurance claims falls below 1 million, many borrowers still have significant levels of student loan debt.

Johnson’s suggestion to relax bankruptcy laws could help those in financial difficulty apply for bankruptcy discharge more easily, given the current process is complex.

His suggestion to clear student loan information from the credit bureaus may be welcomed by consumer advocates. A recent US PIRG report on complaints filed on the Consumer Financial Protection Bureau website found that there was a 50% increase in upset consumers between March and July of this year, compared to the previous year. . And the main complaint was the inaccuracies in the credit reports.

“These problems are not new. They have just been exacerbated by the current economic crisis caused by the pandemic. The truth is that the credit bureaus are long overdue for an overhaul. In the meantime, the least we can do is stop them from penalizing consumers who struggle through no fault of their own, “Mike Litt, director of the US PIRG consumer campaign, said in a press release.

(Graphic: David Foster)

(Graphic: David Foster)

House Democrats called for more lasting relief: The HEROES law, which was passed by the House in May and was never passed by the Senate, provided for $ 10,000 in student loan cancellation for people “In economic difficulty” in addition to an extension of the interest-free payment. pause on student loans and suspension of debt collection.

In the letter, Johnson argued that any cancellation of “student loan debt held by the federal government, other than allowing for the cancellation of student loan debt in bankruptcy, would be haphazard and irresponsible if it were to be canceled.” adopted in an autonomous or reactionary manner ”.

His solution would be to abolish the system and replace it with “Opportunity Plus scholarships of $ 50,000 for each high school graduate to be used for vocational training or undergraduate academic pursuit,” as well as expanded Pell Grants. and new STEEMs (science, technology, education, Engineering and Mathematics).

“The American dream of a better life resulting from obtaining a higher education level has turned into a great American nightmare in large part because of the phenomenon of uncontrolled student debt,” the letter said.

A student collects her diploma at a graduation ceremony on May 6, 2020 in Bradley, Illinois.  (Photo: KAMIL KRZACZYNSKI / AFP)

A student collects her diploma at a graduation ceremony on May 6, 2020 in Bradley, Illinois. (Photo: KAMIL KRZACZYNSKI / AFP)

Johnson’s Philosophy a “Sudden Change” in ED Policy

Noteworthy was Johnson’s departure from the Department of Education’s federal student aid late last year.

Following the announcement of her resignation, lawmakers Senator Elizabeth Warren (D-MA) and Majority Whip Representative Jim Clyburn (D-SC) wrote to DeVos and Johnson’s replacement at the FSA, Mark Brown, to ask him why Johnson started seeing the system. as dysfunctional.

“The public findings of Dr. Johnson, a senior federal student loans official in the Trump administration until his resignation, represent a startling departure from that administration’s policies,” lawmakers wrote. “This sudden change in political position raises serious questions. “

Aarthi is a reporter for Yahoo Finance covering education. Follow her on Twitter @aarthiswami. If you are a student loan borrower struggling with your debt and want to share your experience, contact her at [email protected]

Read more:

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn,Youtube, and reddit.

Previous Dayne St. Clair has a proven track record on loan; Now is the time for his opportunity with Minnesota United FC
Next Liverpool goalkeeper Loris Karius says he can 'imagine staying' at loan club Union Berlin

No Comment

Leave a reply

Your email address will not be published.