Several Key Updates To Share
Overview
Today, we want to catch up on three key topics that have taken place and one or two others anticipated actions that are likely to take place in the days ahead. Yes, we are still marking time and actions in days…
Department of Education Latest Activity
Transition of Federal Student Loan Portfolio
In our last email update, we shared the most recent information at that time regarding an Oval Office declaration from President Trump that he intended to move the student loan portfolio over to the Small Business Administration (SBA). In the week and a half that has transpired since then a great deal of focus has been placed upon the ability of SBA to handle the $1.6-1.8 trillion portfolio, how such a transition could be undertaken, and whether the Trump Administration has the legal authority under both the Department of Education Organization Act (www.govinfo.gov/content/pkg/COMPS-726/pdf/COMPS-726.pdf) and Higher Education Act of 1965 (www.ed.gov/laws-and-policy/higher-education-laws-and-policy) .
All of these areas of focused inquiry – and more – remain open…and CSPEN continues to monitor and engage in discussion in efforts to gain the most recent information publicly available. For example, last week it was announced that SBA, similar to the Department of Education, intends to lay off close to half of its staff (43%). With diminished staffing is SBA capable of running the collection operation of such a vast program?
Where things stand at the moment are that there are very real questions regarding SBA’s capabilities, whether the Treasury Department – who previously balked at taking over the portfolio due to concerns with the extremely large portion of the portfolio that is in delinquency (some estimates are as high as 73% of the portfolio) may reconsider, and the more urgent questions and concerns with bringing immediate stability and reassurances to both the borrowers and the institutional community of continued operations.
We are on top of all of this and will provide more information as new details continue to change and be updated publicly daily, if not weekly.
Resignation of the Chief Operating Officer
It was officially announced shortly after noon today that Denise Carter, the Chief Operating Officer (COO) of the Federal Student Aid (FSA) and former Acting U.S. Secretary of Education has retired following more than 30 years of public service. With her departure, the roles and responsibilities of overseeing the FSA’s administration and delivery of the federal student aid programs will be handled by Acting Under Secretary of Education James Bergeron will serve in both key roles awaiting Senate confirmation of Nicholas Kent to assume the role of Under Secretary and an announcement from President Trump of who is selected to fill the COO position.
Latest Congressional Activity
Congress has been relatively quick to respond to the Administration’s focus on abolition of the U.S. Department of Education and also the past week and a half’s focus on the student financial aid portfolio and future of FSA administration and delivery of student financial aid AND normal procedural operations within the Department.
Congress, including many Republicans, appears reluctant to embrace the plan, and most certainly the aggressive timeline and transition processes that have been made public.
What is important to emphasize is that while Congress seems risk-averse with respect to the dismantling of the Department itself, budget negotiations, which include proposals to entirely reshape HEA, and the federal student loan system remain at the forefront of both House and Senate negotiations. The primary reason…higher education policy is really one of the only places within the jurisdiction of the House and Senate Committees to find the significant savings that the GOP is looking to secure as part of the overall efforts to reduce federal spending and pay of other priorities.
The details of the House’s vision and the Senate’s vision on how to achieve the savings are worlds apart, and it will be a long process ahead to attempt to strike a compromise. The devil of the details of these negotiations will be vitally important and serve as the likely focus of higher education community outreach to Capitol Hill this month – so be prepared to respond to Calls to Action ahead.
On the Horizon
New Executive Order(s)
CSPEN continues to be informed from various sources that President Trump and the Administration could announce new details on campaign commitments to reform the roles and responsibilities of accrediting agencies as part of the HEA Triad (states, accrediting agencies and the Department) as the three entities responsible for the oversight and eligibility of institutions of higher education seeking to administer federal student financial aid. It is noteworthy that the Administration’s focused comments related to the dismantling of the Department of Education suggest that the States should have an increased role. This is customarily noted when speaking in terms of elementary and secondary education control, but within higher education it could take on new meaning…
Within higher education there have been discussions regarding allowing more States to become accreditors by members of the GOP, there are states that are mandating routine changes in institutional accreditation, and many other proposals. Trump himself stated:
“When I return to the White House, I will fire the radical Left accreditors that have allowed our colleges to become dominated by Marxist maniacs and lunatics. We will then accept applications for new accreditors who will impose real standards on colleges once again and once and for all.”
While CSPEN has yet to obtain any of the details, we continue to work our contacts within the Administration and within the community to gain as much information to pass along to the community as possible.
In addition to accreditation, various sources suggest that there may well be other EOs yet to come regarding federal student loans, deregulation, and more.
