Education Secretary Betsy DeVos’ proposal to hand off her department’s $1.5 trillion student loan portfolio to a “standalone government corporation” was met with severe criticism from Democratic candidates who vowed to cancel student debt.
DeVos, who has been criticized by judges for mismanaging student loans, proposed letting someone else do the job on Tuesday.
“I’m not so sure the Federal government should monopolize student lending, but if it does — and, for now, it essentially does — then it must provide services on par with world-class financial firms,” DeVos tweeted. “And that starts with acting like a world-class financial firm. One that is truly independent from interference, political, or otherwise.”
DeVos proposed a “standalone government corporation, run by a professional expert, and apolitical Board of Governors” to take over the student loan portfolio for more than 40 million Americans.
The education secretary also echoed the comments in a speech to college financial officers on Tuesday, according to The New York Times, offering few specifics except to say that the new government corporation should not report to the DeVos.
Under DeVos, the Education Department has come under fire for rejecting nearly all public service workers who applied for a congressionally-allocated student debt relief program, and DeVos herself was recently held in contempt of court for illegally collecting debt from thousands of students defrauded by a for-profit college chain.
“The proposal seems to absolve the secretary and the industry from all responsibility for the mess that 44 million borrowers face today,” Mike Pierce, the policy director at the Student Borrower Protection Center, told Yahoo Finance. “But, in reality, she has spent her tenure shielding companies that rip off borrowers.”
Other critics said the move appears to be DeVos' attempt to preempt the next president from canceling student debt.
“This very much appears to be a [DeVos] scheme to block the next president from unilaterally forgiving federal student debt, which she is well aware a president could do without Congress,” tweeted Intercept reporter Ryan Grim. “The DeVos family is heavily invested in the student loan industry and this is just flat out corruption.”
Grim’s tweet was shared by Briahna Joy Gray, the press secretary for the campaign of Sen. Bernie Sanders, I-Vt.
“Normally the rich are moderately more subtle about rigging the system in their favor,” she wrote. “They're scared. We're ready.”
Sanders also slammed the proposal, urging DeVos to just “cancel all student debt” instead.
“Betsy DeVos really didn't like being held in contempt of court, so she wants to make federal student loans someone else's problem,” tweeted Sen. Elizabeth Warren, D-Mass. “Of course, there's a simpler idea: Universal free college and technical school, and canceling student loan debt.”