Letter to the East Hampton Star
For the past eight years, I ran a non-profit that taught financial literacy. One of the most gnawing problems facing our young is the burden of student debt. Mr. Trump has made escaping the grip of this debt even harder.
For years, student loan guaranty agencies regularly assessed a 16% penalty on defaulting student borrowers, even if the borrowers agreed within 60 days to make good on their bad debts. In July 2015, the Obama administration declared those penalties unlawful. Under the Obama plan, as long as troubled student debtors agreed to make good on their debt in two months’ time or less—and kept those promises—the students would not have to pay the penalty.
The Trump administration had no such patience. The Secretary of Education, Betsy DeVos, recently rescinded the Obama grace period, instead ruling that those borrowers will be vulnerable to penalties if they default on privately held, government-backed student loans, even if they pledge to make good on what they owe.
However, an interesting twist revealed the facially punitive nature of Secretary Devos’ about-face. After an outcry ensued from consumer groups and Democratic lawmakers, the loan companies spoke out. All 26 loan companies that serve as middlemen for the Federal student loan program announced, against their self-interest, that they would not charge the penalty despite permission from Secretary DeVos.
Now, back to the swamp. The Obama plan prompted a lawsuit by United Student Aid Funds Inc., the nation’s largest guaranty agency. At the time, the company was led by Bill Hansen. The legal battle continued until Secretary DeVos’s department put the matter to rest with the new guidance. The next day, one of her top deputies, Taylor Hansen, the son of Bill Hansen, resigned from his job. He had joined the department just a few weeks earlier.
Exactly who is draining what?