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U.S. Secretary of Education Betsy DeVos said that the country’s higher education system is in “crisis” thanks in part to a “government takeover of the student lending system” put in place by the Obama administration. But her contention was quickly fact-checked by a former GOP Senate staffer and other higher education experts.
“Our higher ed system is the envy of the world, but if we, as a country, do not make important policy changes in the way we distribute, administer, and manage federal student loans, the program on which so many students rely will be in serious jeopardy,” DeVos told the Federal Student Aid Training Conference in Atlanta in prepared remarks on Tuesday “Students are taking out tens of thousands of dollars in debt but many are misinformed or uninformed as to the implications of taking on that debt and their responsibilities to pay it back.”
Student debt, she said, is now 10 percent of national debt. “The student loan program is not only burying students in debt, it is also burying taxpayers and it’s stealing from future generations,” she said.
DeVos offered solutions for ballooning student debt, including giving students the opportunity to pursue the postsecondary path that’s right for them, even if that’s not a four-year college degree. She also called for boosting “innovation.” And she appeared to take a swipe at the free-college movement, whose champions include Sen. Bernie Sanders of Vermont, the 2016 Democratic presidential candidate.
“Nothing is free,” DeVos said. “Someone, somewhere ultimately pays the bills.”
But Clare McCann, the deputy director for federal policy on higher education at the New America Foundation, said she sees DeVos making an argument that it’s not worth investing in low-income students who are more likely to take out loans to finance post-secondary degrees.
“I think one thing you see in here, reading somewhat between the lines is that she clearly would like Congress to evaluate the benefits that exist under the student loan program. Which is not necessarily a bad idea, actually,” said McCann, citing public service loan forgiveness that disproportionately benefits graduate students.
“On the other hand, you could read some of this to sort of suggest that we shouldn’t be lending money to low-income students, which kind of flies in the face of the entire concept of the student loan program,” added McCann, who served in the Obama administration. “If the implication here is that low-income students aren’t worth the investment, that’s not what we’ve seen, it’s that low-value programs are not worth the investment.”
The secretary, though, made a point of saying that helping students cover the cost of post-secondary education should be a priority.
“First, people--human capital--are our greatest national resource,” she said in the speech. “It’s in our nation’s interest to support individual students’ interests, to support their potential, their creativity, their destiny. Every person should have the opportunity to pursue the education that’s right for them.”
DeVos blamed spiraling debt in part on the Obama administration’s decision to phase out the Federal Family Education Loan Program, which relied on government-backed lenders, in favor of the Direct Lending program, in which students borrow right from the treasury.
“Since 2010, when the previous administration orchestrated a government takeover of student lending, FSA’s portfolio has skyrocketed. Over 8 percent annual growth. Two times faster than the growth of the cost of attendance and almost four times faster than the growth of our economy,” DeVos said.
But that statement is “utterly false” according to Jason Delisle, who worked for Republicans on Capitol Hill and now serves as a resident fellow at the American Enterprise Institute, a think tank funded in part by DeVos’ family. “It is nearly impossible to imagine that, had the 2010 switch to direct lending not happened, outstanding student debt would be lower today,” Delisle wrote in a 2017 paper.
Just saw @BetsyDeVosED repeat the completely illogical claim that government student lending increased because of changeover to direct loans in 2010. Utterly false. I have a 2017 paper intended to rebut that exact myth. https://t.co/EQiDCr2c7Y pic.twitter.com/o0kEkp206B
— Jason Delisle (@delislealleges) November 27, 2018
DeVos also claimed that when the federal government bolsters student loan money, colleges raise their rates. Student loans account for “80 percent of the actual tuition and fee revenue received by schools,” she said.
That’s a contention made by one of DeVos’ predecessors, Bill Bennett, who served as President Ronald Reagan’s secretary of education. And there’s no evidence that it’s true, said McCann.
“This is a classic one that conservatives often like to throw out there simply isn’t true,” she said.
And Ben Miller, the senior director for postsecondary education at the left-leaning Center for American Progress, questioned DeVos’ estimate that student loans account for 80 percent of colleges’ revenue.
Even among exclusively full time students, who presumably represent a larger % of tuition revenue, only 2/3 get any federal aid. Again, that’s not the same as tuition revenue, but seems unlikely that federally aided make up a larger share of tuition revenue than enrollment pic.twitter.com/qXbuSgDGts
— Ben Miller (@EduBenM) November 27, 2018
What’s more, DeVos’ proposed solutions for skyrocketing student debate aren’t well-defined, said Barmak Nassirian, director of federal policy American Association of State Colleges and Universities.
“It’s appropriate to flag the issues of cost and student debt as a significant problem area,” he said. But the added that the “remedies that the secretary offers are way too sketchy and exceedingly vague.”
Quick eight-week certification programs or apprenticeships aren’t a substitute for postsecondary coursework, he said. And he’s not certain what the secretary means by “innovation” and when she expects the nation would see results from changes, given that a college degree is a lifetime investment.
U.S. Secretary of Education Betsy DeVos listens during a meeting between President Donald Trump and business leaders in the State Department Library of the Eisenhower Executive Office Building at the White House on April 11. --Evan Vucci/AP
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