Group Will Investigate Education Secretary’s Conflicts in Proposed Student Loan Industry Giveaway
Sec. Betsy DeVos’s Billionaire Family Could Benefit from Budget That Eliminates Public Service Loan Forgiveness (PSLF) and Alters Income-Based Repayment (IBR) Plans, Possibly Leading to More Payment Defaults
WASHINGTON, D.C. – As Education Secretary Betsy DeVos prepares to testify this morning before a House appropriations subcommittee on President Trump’s proposed 2018 budget for the Department of Education, Allied Progress announced it is launching an investigation into how the DeVos family might benefit financially from changes to important student loan programs proposed in the budget that could ultimately result in increased defaults. The investigation includes, among other things, Freedom of Information Act requests submitted this morning to the Department of Education and Office of Government Ethics.
In January, the Washington Post reported that DeVos and her husband held a financial interest in Performant, a debt collection company that profits when borrowers default on student loans.
Two policy changes requested in the Trump-DeVos education budget would likely increase the number of student loan recipients defaulting on payments. The proposed elimination of the Public Service Loan Forgiveness (PSLF) program will make it more difficult for public servants like teachers, non-profit employees, and firefighters to pay off student debt. The budget also proposes changing current Income-Based Repayment (IBR) plans to require borrowers to pay back loans at higher monthly rates than currently required. These proposed policy changes increase the likelihood that borrowers would default on their monthly payments more frequently, and would benefit a company like Performant.
“Betsy DeVos may not understand many of the education policies under her purview, but student loan debt is something she knows quite well. She and her family of billionaires found student loan debt collection to be a valuable asset in their investment portfolio, and they’ve shamelessly profited off of students drowning in debt,” said Karl Frisch, executive director of Allied Progress.
He continued, “In her new role as Education Secretary, DeVos moved quickly to promote policies that would likely increase the number of borrowers defaulting on their student loans. Meanwhile, we’ve seen little evidence or documentation explaining when and how Secretary DeVos divested from student loan debt collection services that would financially benefit from the very policy changes she is proposing. That’s why we are launching an investigation to find out what the DeVos family stands to gain from these attacks on the financial well-being of students.”
While Greg McNeilly, COO of DeVos’s family investment group, claims Secretary DeVos has divested from Performant since taking office, the Department of Education has yet to prove that claim or provide any documentation that would show she followed through on her commitment to divest. Furthermore, McNeilly did not provide a date of divestment or other evidence when making his unsubstantiated claim. It is possible that DeVos could have simply transferred these assets to members of her family, or executed the divestment at a time when her policy decision benefited her bottom line.
The Allied Progress investigation into Secretary DeVos’s potential conflict of interest seeks to answer the following questions using research based on public records, including SEC filings, DeVos’s own financial filings, and Freedom of Information Act (FOIA) requests for Department of Education correspondence related to student loan policy changes, specifically with Performant:
- Does Secretary DeVos have evidence to show that the DeVos family divested from her stake in Performant and other for-profit education companies?
- Did Secretary DeVos hold her stake in Performant while promising to roll back the Obama administration’s student borrower protections?
- What contact has Secretary DeVos had with Performant or its lobbyists since she became Secretary of Education?
To speak with Karl Frisch about the DeVos investigation, please contact Mike Czin at 202-286-7654 or mczin@skdknick.com.
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Allied Progress is a nationwide, progressive advocacy organization that uses hard-hitting research and creative campaigns to hold Wall Street and powerful special interests accountable. Since launching in 2015, the organization has led high-profile campaigns on several issues including reforming the payday lending industry and exposing the those working to cripple the Consumer Financial Protection Bureau.