Lawmakers just confirmed the most controversial secretary of education in recent U.S. history, putting Betsy DeVos in charge of America’s public school system and the nation’s trillion-dollar student loan program.
Following protests from teachers across the country and harsh comments from Democratic lawmakers, the Senate confirmed Betsy DeVos to lead the Department of Education by a vote of 50 to 50, with Vice President Mike Pence, in a historical first for a cabinet nomination, breaking the tie. Her well-documented support of increasing public funding for private schools occupied most of the headlines and protest signs, but DeVos will also oversee the country’s student loan forgiveness programs — which touches millions of Americans — and even after her confirmation hearing earlier this month, little is known about how she plans to approach the issue.
“Thousands of Americans are defaulting on student loans every single day and it is something that simply cannot be ignored,” said Rohit Chopra, the former student loan ombudsman at the Consumer Financial Protection Bureau. “While much of the attention around her confirmation is focused on K-12 issues, higher education is going to have to be front and center given the upcoming reauthorization of the Higher Education Act.”
Lawmakers are likely to reauthorize the Higher Education Act — the broad statute that governs higher education and the student loan program — this year after delays. While that process is overseen by Congress, it is driven in part and influenced by the Secretary and her priorities.
When it comes to DeVos, it’s hard to say exactly what those are. In written answers to questions posed by Sen. Patty Murray, a Democrat from Washington state. DeVos provided a few hints as to the direction her policies might take. She described free colleges and debt-elimination proposals as “in stark contrast” to approaches that address the core issues in higher education. DeVos also criticized the rising cost of college and praised alternative paths to higher education that don’t center on the brick and mortar four-year school.
Still, much remains unclear about her positions on the student loan program. One of her most notable comments on student debt so far, was a mistaken data point. During her confirmation hearing DeVos twice said that student loan debt ballooned 980% over the past eight years. The reality is outstanding student loan debt has jumped by roughly 100% between 2008 and 2016.
“It’s concerning,” Ben Miller, the senior director of postsecondary education at the Center for American Progress, a left-leaning think tank, said of the flub, “because we can’t tell if she’s giving a bad performance or if she’s got bad staff behind her.”
One possible explanation for how DeVos and her staff came to the 980% number is by focusing solely on the growth in the Direct Loan program, a specific type of federal student loan, said Jason Delisle, a resident fellow at the American Enterprise Institute, a conservative think tank. (Between 2007 and 2011, that program grew roughly 1000%, his figures show.) Still, that’s concerning because it either signals that DeVos and her team are confused about the various elements that make up the loan program or because they don’t believe that loans made by private banks and guaranteed by the government are actually federal student loans, Delisle said.
The second scenario would be more troubling, said Delisle. In 2010, the Obama administration moved the federal student loan program entirely to Direct Loans — or loans made directly to students by the government. Before that, the bulk of federal student loans were made by private banks, but guaranteed by the government. Critics of the old system have said that it benefited banks while costing students and taxpayers.
“Ever since [the switch], the Republicans have tried to make the case that, that was a bad move,” Delisle said. “There might be a hint in what Betsy DeVos said that she’s inclined to see it that way too.”
When asked to clarify DeVos’s calculations following the hearing, the transition team appeared to walk back DeVos’s characterization of the growth of the student loan program, saying she was referring to the increase in college costs over the past several decades. Regardless of the reason, her gaffe is cause for concern, Miller said. “You should at least understand the thing you’re trying to operate.”
Miller said he also worries that DeVos’s lack of knowledge on higher education would make her susceptible to special interests. For-profit education companies spent roughly $5.7 million on lobbying in 2015, according to the Center for Responsive Politics, an organization that tracks money in elections. During her confirmation hearing, DeVos expressed reservations about defending the recently implemented gainful employment regulations developed by the Obama administration, which aim to hold for-profit colleges accountable when they fail to provide students with good outcomes.
DeVos will also be responsible with overseeing a program created by the Obama administration to make borrowers whole when colleges mislead them. Officials developed regulations after pressure from activists in the lead up to the collapse of major for-profit college chain Corinthian Colleges. In written answers to questions posed by Murray, DeVos said she would “review” those regulations and “utilize those tools to ensure a fair review that protects all parties, including student and taxpayer interests.”
“Students will be keeping a close eye on whether the new secretary gives them refunds when they’ve been defrauded or if she’ll side with political donors,” Chopra said.
Critics will also be watching DeVos’s approach to issues in which she once had a financial stake. A billionaire, DeVos’s vast financial holdings, which include positions in businesses ranging from a student loan debt collector to embattled blood-testing startup Theranos to the Chicago Cubs, have been a sticking point for Democrats. She’s agreed to cut ties with 102 companies and investment vehicles that could be affected by the Department of Education. But Senate Democrats said that was not enough and asked her to provide detailed information about her holdings, particularly given her role overseeing and awarding lucrative contracts with participants in the student loan industry.
Still, some, including Delisle, argue concerns over potential conflicts of interest are overblown. “Someone with billions of dollars is unlikely to be swayed by moves in a very small sliver of her portfolio,” he said, adding that her detractors want to have it both ways. “Critics want to say she has no experience in any of these areas, but also say that she has all of these conflicts of interest because she’s intimately involved with these companies.”
DeVos first test in her role overseeing the agency’s relationship with private companies may be in the way she approaches the contracting process currently under way to decide which companies will take part in the student loan servicing system. The Obama administration attempted to overhaul the servicing contract to push companies to be more receptive to borrowers’ needs. It remains to be seen whether the Trump administration will continue that process or abandon it.
Mostly though, higher education leaders and policy makers are in wait-and-see mode as DeVos takes the helm and perhaps, the controversy over her nomination settles. Delisle said he doesn’t expect to get a better understanding of the Trump administration’s approach to higher education and college costs until the president submits his budget to Congress.
“The big concern is she is a neophyte in this area,” Miller said.
This article originally appeared on Marketwatch.com and was written by Jillian Berman.