Trump official throws up hands on student loans
Departing A. Wayne Johnson says it’s time to ‘stop the insanity’ on ‘fundamentally broken’ system
Even a Trump administration official says it’s time to forgive large chunks of a “fundamentally broken” student-loan system. (Shutterstock)
By Ted Cox
A. Wayne Johnson is leaving his position in the Trump administration’s Department of Education, throwing up his hands over the “fundamentally broken” student-loan system and saying it’s time to “stop the insanity” and forgive $925 billion in college debt.
According to The Wall Street Journal, Johnson announced he would leave the Trump administration Thursday to run for a U.S. Senate seat in Georgia, but on the way out he gave a withering assessment of the federal program on student loans, which he formerly administered as chief financial officer of the Office of Federal Student Aid.
“We run through the process of putting this debt burden on somebody,” Johnson told the Journal, “but it rides on their credit files — it rides on their back — for decades.”
Calling the federally administered program “fundamentally broken,” he said, “The time has come for us to end and stop the insanity.”
Appointed to the CFO post in 2017 by Education Secretary Betsy Devos — a far more divisive figure, especially on student debt — Johnson was soon reassigned to a position revamping the federal loan program, which has a $1.5 trillion portfolio, and the connections between student borrowers and companies servicing the debt.
According to the Journal, “Johnson said repayment trends suggest much of the debt will likely never be repaid, and he is calling for moving toward a system that gets the government out of student lending.”
Johnson proposed forgiving up to $50,000 a person in student loans, which would affect an estimated 37 million people and release $925 billion. He suggested financing the debt forgiveness through a 1 percent tax on corporate earnings.
The Journal said Johnson also had difficulties dealing with a program begun in 2007 under President George W. Bush that would have forgiven student loans for public-service workers after 10 years on the job, including of course teachers in public education. The New York Times reported that, in the 18 months after borrowers first became eligible in 2017, “73,554 people applied to have their student loans wiped out. And 73,036 were turned down — a rejection rate of 99.3 percent.” The American Federation of Teachers filed suit against DeVos in July charging “gross mismanagement” of the program
Runaway student loans have threatened to turn an entire generation of college graduates into indentured servants forced to work jobs that enable them to pay the loans back. Studies have found that they limit young adults from being able to buy their own homes and other things previous generations took for granted.
The Illinois Economic Policy Institute put out a report two years ago warning of DeVos’s attempts to scuttle the Public Service Loan Forgiveness Program. ILEPI Policy Director Frank Manzo IV said, “In conversations with my millennial peers in the Chicago area, it is clear to me that high student-loan debt is hurting the Illinois economy, hindering the ability of people like me to become homeowners, to spend at local shops, to be entrepreneurial and open our own businesses, and to build wealth through saving and investing.”
The Journal reported that Johnson’s forgiveness proposal would be even larger than that backed by U.S. Sen. Elizabeth Warren of Massachusetts in her 2020 presidential campaign, which has been valued at $640 billion. It is not as ambitious as the counterproposal from Warren’s Democratic campaign opponent U.S. Sen. Bernie Sanders of Vermont, who has suggested forgiving all student debt at an estimated cost of $1.6 trillion.
The Journal reported that DeVos is not on board with any of the proposals to forgive student debt. She recently told Fox News the Sanders and Warren plans “are crazy,” adding, “.Who do they think is actually going to pay for these? It’s going to be two of the three Americans that aren’t going to college paying for the one out of three that do.”