: DeVos appointee who oversaw America’s student-loan portfolio resigns as Biden education secretary pledges to ease student-debt burden

United States

Mark Brown, the head of the office overseeing the government’s student-loan portfolio, resigned Friday, following calls on the Biden administration to remove Brown, who was appointed by former Secretary of Education Betsy DeVos. 

Secretary of Education Miguel Cardona said in a statement Friday morning that he’d accepted Brown’s resignation from the post of chief operating officer of the Office of Federal Student Aid. In the statement, Cardona also hinted at his priorities for the office and higher education and student debt more broadly. 

“Under my leadership, the Department of Education will work to strengthen college as a reliable pathway to the middle class while protecting students and loan borrowers,” Cardona said in the statement. “In service to our nation’s students, the Department’s Federal Student Aid division will renew its focus on streamlining access to and management of federal financial aid, easing the burden of student debt, and carefully stewarding taxpayer dollars.” 

$ 1.5 trillion in federal student loans

Though it’s not well known, the Office of Federal Student Aid is crucially important to the experience of student-loan borrowers. The office oversees the government’s roughly $ 1.5 trillion federal student-loan portfolio and is responsible for disbursing the loans and grants that go out to schools on behalf of students, monitoring the companies collecting borrowers’ student-loan payments, implementing relief and repayment programs, and more. 

MarketWatch reported in January that Sen. Elizabeth Warren, a Massachusetts Democrat, was calling for new leadership of the office. Borrower advocacy groups have also said Brown should be replaced.

In a statement released Friday, Warren said Brown’s resignation “is good for American borrowers,” adding that she looks “forward to working with Secretary Cardona to reform the FSA so that it works for student borrowers instead of big student loan servicing corporations.”

Appointed by DeVos in 2019, Brown had some time left in his five-year term. The head of FSA isn’t necessarily removed with a change in administration, but Brown’s tenure in the job combined with the crucial role the head of FSA will play in any student-loan policy changes had left critics wary of a DeVos appointee continuing to lead the office under the Biden administration.   

Under Mark Brown’s leadership, FSA had been plagued by challenges executing on its required tasks.

Under Brown’s leadership, FSA had been plagued by challenges executing on the tasks it’s charged with, which are often operationally complex and also high stakes for borrowers. Months after the CARES Act had turned off student-loan payments and collections, the agency struggled to shut off the wage garnishment system. 

The National Student Legal Defense Network and the National Consumer Law Center sued the Department of Education over the issue and even in August — several months after the coronavirus-era payment pause was put in place — thousands of borrowers continued to have their paychecks seized. 

Though the pandemic and the economic-relief measures necessary to stop it were a surprise, FSA officials knew several months before COVID-19 became a national emergency that they were struggling to control the unwieldy student-loan system.

DeVos held in contempt of court

In October 2019, a federal judge held DeVos in contempt of court after student-loan servicers hired by the Department continued to bill and seize wages and tax refunds from borrowers who were victims of fraud, despite a court order to stop. In a video statement released the day of the ruling Brown said the agency took “full responsibility” for the issue. 

FSA faced management challenges even before Brown took over. Brown was the third person since 2017 to run the office. In May of that year, James Runcie, who was appointed to the position during the Obama administration, resigned three years early, writing in a letter to staff at the time obtained by The Washington Post that he was “incredibly concerned about significant constraints being placed on our ability to allocate and prioritize resources, make decisions and deliver on the organization’s mission.”    

DeVos replaced Runcie with A. Wayne Johnson, a former private student-loan and credit-card executive, who was replaced by Brown in March 2019 and ultimately left the agency in October of that year, calling for student-loan cancellation on his way out. 

With Brown’s resignation, Robin Minor, the deputy chief operating officer for partner participation and oversight, will serve as acting chief operating officer, Cardona said in the statement. 

Stakeholders are circulating the names of at least two candidates to replace Mark Brown.

Stakeholders are circulating the names of at least two candidates to replace Brown permanently, HuffPost reported Thursday. The Department of Education didn’t have any information to share beyond Cardona’s statement about the office’s new leadership Friday. 

One is Mark Kaufman, the chief executive officer of Neighborhood Impact Investment Fund, a nonprofit that works with the city of Baltimore and private partners to provide financing for housing, commercial and other development in historically disadvantaged neighborhoods. 

Previously Kaufman worked as a counselor to Deputy Treasury Secretary Sarah Bloom Raskin during the Obama administration and as Maryland’s Commissioner of Financial Regulation. Borrower advocates have praised Bloom Raskin’s approach to the student-loan problem; during her tenure, she highlighted challenges in the student-loan market, including with servicers, which are borrowers’ main point of contact for repaying their student loans and overseen by FSA. 

The other, Abigail Seldin, is the chief executive officer of the Seldin/Haring-Smith Foundation. Since its founding in 2019, the organization has funded and organized projects around student parents, students struggling with basic needs, and others. Last year, the organization launched Swift Student, a free tool students can use to populate letters to send to their schools appealing for changes to their financial-aid packages. These appeals became particularly important during the pandemic as students’ finances changed as a result of the downturn. 

Before launching the foundation, Seldin created a tool called College Abacus that allowed users to compare the actual price they’d pay for college — information that can be hard to come by —  based on financial and other information they’d input into the tool. 

In 2014, College Abacus was bought by Education Credit Management Corporation, an organization that has faced scrutiny over its student-debt collection practices. Following the sale, Seldin served as a vice president of innovation and product development at ECMC for about two years. 

Daunting task lies ahead

Regardless of who is appointed to lead FSA, they’ll have a daunting task ahead of them. Student loan payments and collections are scheduled to resume in October and the head of FSA will play a crucial role in ensuring that the payment system turns back on smoothly and borrowers don’t slip into default. The Department of Education is also in the middle of revamping the student loan servicing system, which FSA oversees. 

In addition, if the Biden administration is hoping to follow through with many of its campaign promises to tweak the student-loan system, it will need the help of FSA and its leadership to implement them successfully. 

For example, administration officials have said they’d like to reform PSLF and expand income-driven repayment, which allows borrowers to pay back their debt as a percentage of their income. 

Borrower advocates have also called on the administration to beef up enforcement of for-profit colleges and streamline debt cancellation for borrowers with disabilities and those whose schools closed unexpectedly — tasks that will also take FSA’s cooperation.