A former top federal student loan official in the Trump administration says the system he oversees needs to be abolished and replaced.
A. Wayne Johnson, who is now running as a Republican for a quote in the Georgia Senate after resigning in November 2019, wrote a letter urging the Senate to consider major reforms to the student loan machine in the midst of stimulus package negotiations amid the ongoing coronavirus pandemic.
The former chief student officer of Federal Student Aid (FSA) suggested three ideas: Amend the law to allow student loans to be dismissed under bankruptcy “without the condition of unnecessary hardship” if the debt is more than 10 years old, remove all information regarding to federal student loans from files of lenders’ credit bureaus, extending the payment break signed by President Donald Trump over the weekend until December 31, 2021.
Johnson, appointed by Education Secretary Betsy DeVos in 2017, added that canceling debt at the moment was “unfavorable” – that is, until the system itself was dismantled: “It is my position that the cancellation of the federal student loan debt alone should be at the same time that it is the abolition of the current Federal Student Loan Program. “
A. Wayne Johnson. (Credit: A. Wayne Johnson)
Although there are signs of the economy recovering as the number of new claims for unemployment insurance drops below 1 million, many lenders still maintain substantial levels of student loans.
Johnson’s proposal to reduce bankruptcy laws could help those struggling financially to more easily file for bankruptcy, given the complexity of the current process.
His suggestion to expand student loan information from credit bureaus can be welcomed by consumer advocates. A recent report by US PIRG of complaints submitted to the Consumer Financial Protection Bureau website, found that between March and July of this year, there was a 50% increase among miffed consumers, compared to the year before. And the main complaint was inaccuracies in credit reporting.
“These problems are nothing new. They are just aggravated by the current economic crisis caused by the pandemic. The truth is that credit bureaus are long forgotten for a repeat. In the meantime, the least we can do is stop them from striking consumers who are struggling with no guilt of their own, “US PIRG Consumer Campaign Director Mike Litt said in a press release.
(Graph: David Foster)
House Democrats call for more lasting relief: The HEROES Act, which passed the House in May and was never passed by the House of Representatives, included $ 10,000 in student loan forgiveness for those “economically distressed”, in addition to an extension of the interest-free payment pausing on student loans and stopping debt collection.
In the letter, Johnson argued that any cancellation of ‘federally-held’ student loan debt, other than by allowing student loan debt to be canceled under bankruptcy, would be accidental and irresponsible if entered on a standalone or reactionary basis. “
His solution would include abolishing the system and replacing it “with Opportunity Plus Scholarship Grants of $ 50,000 for each high school graduate to use for job training or academic pursuit of higher education”, as well as extended Pell grants and new STEEM (Science) , Technology, Education, Engineering, and Math) grants.
“The American dream of a better life caused by getting a level of higher education has turned into a Great American Nightmare, in large part because of the phenomena of unchecked student loan debt.”
A student picks up her diploma at a graduation ceremony on May 6, 2020 in Bradley, Illinois. (Photo: KAMIL KRZACZYNSKI / AFP)
Johnson’s departure from the Federal Student Aid Department of Education late last year was remarkable.
Following the announcement of his resignation, lawmakers wrote sen. Elizabeth Warren (D-MA) and Majority Whip Rep. Jim Clyburn (D-SC) addressed DeVos and Johnson’s replacement at FSA, Mark Brown, and asked why Johnson saw the system as dysfunctional.
“The public conclusions of Dr. Johnson, a top federal student loan official in the Trump administration until his dismissal, represent a stark departure from the policies of this administration,” the lawmakers wrote. “This sudden shift in policy position raises serious questions.”
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@aarthiswami. If you are a student loaner who is struggling with your debt and would like to share your experience, please contact her at[email protected] “data-reactid =” 102 “>Aarthi is a reporter for Yahoo Finance dealing with education. Follow her on Twitter @aarthiswami. If you are a student loaner who is struggling with your debt and would like to share your experience, please contact her at [email protected]
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