Public education advocates are demanding another hearing on Trump nominee for Secretary of Education, Betsy DeVos, after her dismal performance in front of the Senate Health, Education, Labor and Pension Committee (HELP) January 17th and after the late release of her ethics report on January 20th.
The report, available here, details some 102 companies that might pose a conflict of interest for DeVos and sheds new light on the nominee’s investments and ethics.
While most Secretaries of Education have an extensive resume as school administrators or as educators, DeVos has neither. DeVos is married to the billionaire heir to the Amway fortune, Dick DeVos. Together they have spent millions advancing a radical school privatization agenda, including taxpayer vouchers for private and religious schools, and electing politicians across the nation willing to advance that agenda. DeVos was asked about her experience for the job by Democratic senators who were only allowed 5 minutes each.
While most senators asked about k-12 education, the exchange with Massachusetts Senator Elizabeth Warren on the topic of higher education was a standout. (See the video here.)
Warren Grills DeVos on Higher Education Experience
In the world of higher education, “the Department of Education is in charge of making sure that $150 billion we invest in students each year gets into the right hands and that students have the support they need to pay back their student loans,” said Warren.
“The Secretary of Education is essentially responsible for managing $1 trillion dollar student loan bank and distributing $30 billion in Pell grants to students each year. The financial futures of an entire generation of young people depend on your department getting that right.”
“Now Mrs. DeVos do you have any direct experience in running a bank?” asked Warren.
“Senator, I do not,” replied DeVos.
“Have you ever managed or overseen a $1 trillion loan program?” asked Warren.
“No, I do not,” replied DeVos.
“How about a billion dollar loan program?” asked Warren.
“I do not.”
“How about participating in one?” Warren asked if DeVos or her children had ever taken out a student loan from the federal government, the answer, of course, was no.
And DeVos refused to commit to enforcing federal rules that prevent waste, fraud, and abuse against predatory for-profit institutions like the ITT Technical Institutes shut down by the Obama administration and Trump University, which settled a $25 million dollar lawsuit alleging fraud shortly before Trump took office.
But DeVos appears to be selling herself short. She does have experience with higher education, with investments in a debt collections agency.
DeVos Invests in Student Debt Collection
Student loan debt in America recently topped $1.3 trillion and continues to grow. The average Class of 2016 graduate has $37,172 in student loan debt, up six percent from last year.
This staggering debt is a big problem for students, parents and society as a whole. Student loan payments are surpassing groceries as the biggest monthly expense for many households. The crisis prompted Sen. Bernie Sanders to propose a bold solution, free education at public institutions, while on the campaign trail.
While many economists and policymakers see a looming disaster, Betsy DeVos apparently sees an opportunity to cash in.
In a Office of Government Ethics report that was completed January 20, DeVos agreed to divest from a long list of companies that pose a conflict of interest.
On the list, are a number of firms that have found ways to profit off of public education.
Among them is LMF WF Portfolio, a company which helped finance a $147 million loan to a debt collection agency that does business with the Department of Education, called Performant Financial Co.
Performant recently lost out on a U.S. Department of Education contract and is appealing the decision with the Government Accountability Office. Performant desperately needs that contract because it represents 24 percent of its business, according to the company’s SEC report, and its stock is tanking to $2 a share. If confirmed as Secretary, DeVos would be in a position to influence the awarding of these contracts and would have oversight responsibility for private debt collectors working for the government, explains the Washington Post.
And Performant clearly needs oversight.
Performant racked up 346 complaints with the Better Business Bureau. The company is accused of applying wage garnishments for debt already paid, calling debtors at work, calling family members of debtors at work, and other inappropriate and potentially illegal behavior. One consumer complaint posted online says Performant repeatedly pestered a 90 year old World War II vet for a nonexistent student loan with Wells Fargo.
The Consumer Financial Protection Bureau, the financial watchdog agency that Senator Warren helped to create during the financial crisis of 2009, also has numerous complaints against the company registered in its public database.
- A student in Massachusetts filed a complaint with the CFPB against Performant for its continued attempts to collect debt that was already paid.
- A student in Georgia filed a complaint against Performant for using “obscene/profane/abusive language”.
- A student in South Carolina filed a complaint with the CFPB because Performant attempted to collect the wrong amount.
- A Connecticut student filed a complaint against Performant for “continued attempts to collect debt” that was not theirs.
- A student in Illinois filed a complaint against Performant because they did not receive a right to dispute notice.
After receiving a flood of complaints about abusive collection practices (the most common complaint is that consumers are dogged for debt they do not owe), CFPB is considering further regulating the debt collection industry and proposed new rules in 2016.
DeVos has agreed to divest herself from these companies and a list of others profiting from providing education-related services, such as KinderCare Education started by “greed is good,” junk-bond king Michael Milken, but her investments in these firms illustrate how motivated she is to monetize a public education system that most Americans consider a public trust.
“It is already unquestionable that Betsy DeVos is the most unqualified Education Secretary nominee in our nation’s history, but it is clear that if she is confirmed, she will make the student debt crisis exponentially worse,” said Scot Ross of One Wisconsin Now, who has pushed for meaningful solutions in the state of Wisconsin. “Allowing borrowers to refinance their federal student loans, just like you can a mortgage, is something that would immediately allow 25 million borrowers get lower interest rates at no net cost to taxpayers.”
“But if Betsy DeVos is personally profiting from the existing system, she will likely do nothing to help the hardworking student loan borrowers across Wisconsin and across the nation,” said Ross.