Former Chief Strategy and Transformation Officer of Federal Student Aid A. Wayne Johnson has criticized the department of education in mishandling students’ debts. He argued that the department has become the most irresponsible lender in the world.
He also said that in the future, this reckless will result in a crisis due to increasing student debts.
The student debt debate has taken center stage in this election period in the US. The efficiency of student loan repayment is now being discussed openly by all political parties.
Johnson had worked in the United States Department of Education from 2017 until his resignation in October 2019 after being appointed by the education secretary, Betsy Devos.
In an interview with CNBC, Johnson said,
The Department of Education is the largest consumer financial lender in the world, and we’re the most—in my opinion—irresponsible.
Johnson who is running for the US Senate also called the current debt situation in the US unsustainable. The biggest contributor to this problem was the ever-increasing debt interests. These interests begin to accrue immediately after taking out a student loan.
Just like private loans, the students’ loans have higher interests and although they are federally controlled, interest on the loans is a must pay. This has resulted in a situation where last year, 70 percent of the graduating students had some form of student loans.
The loan repayments which currently stands at 1.5 trillion and with 44 million students already in debt is expected to continue increasing. This is estimated to have a detrimental effect on the economy of the country. Johnson argued that if nothing is done to address this problem, graduating students will take decades to repay these debts. Johnson continued by saying,
Student and parent borrowers are getting crushed, it could be argued that we border on predatory.
Ideas on how to solve this crisis have been floated by the Democratic Party presidential candidates with front runners such as Biden, Warren, and Sanders suggesting loan forgiveness for students. This, however, has been dismissed by Betsy Devos and the Trump administration.
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The department of education stance on the matter
The education secretary in an interview on Fox News with Brett Baier called these ideas by democrats ‘crazy’. She continued by suggesting that the programs democrats are suggesting will mean that those who did not attend college or universities will be paying student loans for those who did.
The solution to student debts will require bipartisan involvement and as Johnson noted, it has to be addressed as soon as possible. If this is not done, the problem will most assuredly result in a crisis.
