IT IS GREAT TO SEE EVERYONE HERE. I HOPE EVERYONE ENJOYED LUNCH WITH DETROIT SOUL, UP-AND-COMING PROVIDER IN OUR BUSINESS. I AM REALLY GLAD THAT THEY COULD COME TO HELP SUSTAIN US ALL. I WILL INTRODUCE WEIGHT.AFTER HIS REMARKS, WADE WILL INTRODUCE THE PANEL. WADE HENDERSON ÃI NEED MY GLASSES FOR THIS. [LAUGHTER] WADE HENDERSON RECENTLY RETIRED AS A DAVID A SCHOOL OF LAW FIRST JUNIOR CHAIR A PUBLIC INTEREST LAW. HE IS A SENIOR FELLOW AT THE CENTER FOR RESPONSIBLE LENDING. FROM 1996 UNTIL 2017, WADE HENDERSON WAS THE LEADER OF THE WASHINGTON CONFERENCE ON CIVIL AND HUMAN RIGHTS WHICH IS AN ABSOLUTELY ESSENTIAL AND FANTASTIC ORGANIZATION IN WASHINGTON D.C. THAT BRINGS TOGETHER THE CIVIL RIGHTS COMMUNITY AROUND THE REALLY CRITICAL ISSUES OF PUBLIC POLICY. I FOUND IN MY TIME IN WASHINGTON ÃI FIRST MET WADE WHEN HE FIRST STARTED AT THE CONFERENCE IN 1996 WHEN I WAS SERVING IN THE CLINTON ADMINISTRATION. I GOT A CHANCE TO WORK WITH HIM IN THE CONFERENCE ON FAIR LENDING ISSUES IN THE COMMUNITY REINVESTMENT ACT, THEN A CHANCE TO WORK TOGETHER AGAIN IN THE OBAMA ADMINISTRATION. I ALWAYS RELIED ON WADE FOR A WONDERFUL MIXTURE OF DEEP, SUBSTANTIVE KNOWLEDGE, A REALLY STRONG POLITICAL SENSE, A DEEP AND MORAL COMMITMENT TO THE ISSUES AT HAND, AND THAT RARE WASHINGTON TRAIT, COMMON SENSE. SO, I AM DEEPLY GRATEFUL TO WADE HENDERSON FOR BEING HERE. AMONG HIS MANY HONORS AND ACHIEVEMENTS HE IS A GRADUATE OF HOWARD UNIVERSITY AND RUTGERS UNIVERSITY SCHOOL OF LAW, AND HAS GOTTEN HONORARY DEGREES FROM A NUMBER OF INSTITUTIONS INCLUDING THE GETTYSBURG COLLEGE. HE IS A MEMBER OF THE BAR OF WASHINGTON D.C., THE SUPREME COURT BAR, AND I AM DELIGHTED TO WELCOME HIM HERE, TO THE FORD SCHOOL FELLOWS. [APPLAUSE] ♪ GOOD AFTERNOON, EVERYONE. COME ON, WAKE UP GUYS! THAT WAS A GREAT LUNCH! WAKE UP! FIRST OF ALL, I AM HONORED TO BE WITH YOU. AND MICHAEL, THANK YOU FOR THE VERY GENEROUS INTRODUCTION. I APPRECIATE IT. I WANT TO THANK THE CENTER FOR FINANCE LAW AND POLICY FOR THE INVITATION TO PARTICIPATE IN THIS EXTRAORDINARILY IMPORTANT CONFERENCE. THE GERALD FORD SCHOOL IS AN INCREDIBLY DISTINGUISHED VENUE AND IS PERFECT FOR OUR DISCUSSION ABOUT CONSUMER PROTECTION IN AN AGE OF UNCERTAINTY. NOW, BECAUSE THIS IS THE LAST PANEL, I WOULD LIKE TO TAKE THE LIBERTY OF THANKING THE ORGANIZERS FOR THE EXTRAORDINARY JOB THEY HAVE DONE IN PULLING THIS TOGETHER. KRISTI, YOU, TRACY, YOU KNOW, THIS HAS REALLY BEEN A FIRST RATE PRODUCTION. THANK YOU SO MUCH FOR YOUR GENEROSITY. AND THE LUNCHES, BOTH TODAY AND YESTERDAY, THEY WERE QUITE EXTRAORDINARY. I NORMALLY THINK THE WAITSTAFF AND THE PLACES I GO BECAUSE I KNOW HOW HARD IT IS TO SERVE FOOD. I USED TO DO THAT MYSELF. I USED TO DO THAT MYSELF. IT WAS REALLY GOOD. AS MICHAEL MENTIONED, I AM THE LEADER AT THE CONFERENCE OF THE CENTER FOR HUMAN RIGHTS, BUT I'M HERE IS A SENIOR FELLOW FOR THE CENTER OF RESPONSIBLE LENDING. I WANT TO THANK MY COLLEAGUES THE CENTER FOR THEIR INCREDIBLE RESEARCH ON THE ISSUE OF STUDENT LOAN DEBT AND THEIR HELP FOR PREPARING MY REMARKS. NOW I DECIDED TO ENTITLE MY PRESENTATION, GOOD DEBT, BAD DEBT, THIS STEAMY UNDERSIDE OF THE STUDENT DEBT CRISIS WHICH I HOPE IS PROVOCATIVE ENOUGH TO KEEP YOU AWAKE AFTER ALL OF THE FOOD THIS AFTERNOON. [LAUGHTER] SO BEFORE WE BEGIN, I WOULD LIKE TO TAKE A MINUTE TO OFFER A COUPLE OF PRELIMINARY COMMENTS AND FIRST I WOULD REALLY LIKE TO ACKNOWLEDGE MICHAEL BARR. HE WAS VERY GENEROUS IN HIS COMMENTS ABOUT ME. I'M NOT A PERSON WHO MICHAEL HIRED IN HIS TENURE. [LAUGHTER] ONE OF THE FEW HERE AT THE CONFERENCE, APPARENTLY! [LAUGHTER] BUT I DID WANT TO LIFT MICHAEL UP. WHEN I MET HIM, HE WAS YOUNG POLICY, FRESH OUT OF LAW SCHOOL, MAYBE 3 YEARS OR SO. AND WE CONSPIRED TOGETHER TO ACTUALLY INCREASE THE LEVEL OF CIVIL RIGHTS ENFORCEMENT FUNDING ACROSS THE BOARD. MICHAEL WAS AT OMB. BECAUSE OF HIS WORK, BECAUSE OF FRANK RAINES WHO HE WORKED FOR, BUT REALLY BECAUSE OF MICHAEL'S COMMITMENT TO THE ISSUE, WE WERE ABLE TO INCREASE THE AMOUNT OF CIVIL RIGHTS ENFORCEMENT FUNDING AT UNPRECEDENTED LEVELS. I GIVE MICHAEL A LOT OF CREDIT FOR THAT. IT REALLY TOOK COMMITMENT, KNOWLEDGE AND SUBSTANCE, HOW TO WORK THE SYSTEM, IF YOU WILL, TO PRODUCE THAT RESULT. SO IT WAS A REALLY GOOD OUTCOME. MICHAEL, THANK YOU FOR THAT. IT WAS VERY IMPORTANT. AND I WOULD BE REMISS IF I DID NOT ALSO TAKE A MINUTE ÃI'M HERE IN MICHIGAN, GUYS, RIGHT? IF I DID NOT ACKNOWLEDGE 2 OF YOUR NATIVE SONS WHO, IN MY VIEW, I CANNOT COME TO MICHIGAN WITHOUT MENTIONING THEM, THE HOUSE OF REPRESENTATIVES, 2 OF THE LONGEST SERVING MEMBERS IN CONGRESS. JOHN DINGELL WHO SERVED FROM CHAIR OF THE ENERGY AND COMMERCE COMMITTEE, AND JOHN CONYERS, CHAIR OF THE HOUSE JUDICIARY COMMITTEE WHO WAS NO SLOUCH HIMSELF TO CONGRESSIONAL SERVICE. HE CAME IN IN 1965 AND SERVED UNTIL DECEMBER 2016. [APPLAUSE] YEAH, THEY DESERVE ÃTHANK YOU, THEY DESERVE ÃTHEY DO DESERVE CREDIT. NOW JOHN DINGELL REALLY PRIDED HIMSELF ON BEING INVOLVED IN THE 1964 CIVIL RIGHTS ACT. THAT WAS HIS PROUDEST ACHIEVEMENT BUT HE WAS ALSO RESPONSIBLE FOR MEDICARE, FOR THE CLEAN WATER ACT, AND HE HELPED TO LEAD THE FIGHT OF THE AFFORDABLE CARE ACT. YOU DON'T GET BETTER SERVICE THAN THAT, AND THAT SHOULD BE REMEMBERED. JOHN CONYERS TOOK GREAT PRIDE IN BEING INVOLVED IN THE 65 VOTING RIGHTS ACT, THE FAIR HOUSING ACT AND THAT SHOULD BE REMEMBERED. JOHN CONYERS TOOK GREAT PRIDE IN BEING INVOLVED IN THE 65 VOTING RIGHTS ACT, THE FAIR HOUSING ACT OF 1968, 1988, THE MATTHEW SHEPARD HATE CRIME BILL, MANY CRIMINAL JUSTICE LAWS THAT HELP REFORM TO OCCUR. WE ARE THANKFUL FOR THEM, AND WE KNOW THAT THEY ARE HERE IN SPIRIT IN MICHIGAN IS AN IMPORTANT REMINDER. I STAND ON THE SHOULDERS OF PEOPLE LIKE JOHN CONYERS AND JOHN DINGELL, SO THANK YOU FOR INDULGING ME. NOW, MY FINAL PRELIMINARY REMARK, GUYS ÃAND I WILL KEEP THIS SHORT! I PROMISE THAT THIS IS MY FINAL PRELIMINARY REMARK! [LAUGHTER] HE REALLY IS A PRELUDE TO MY REMARKS IS HEAVEN WHICH IS A REFERENCE TO THE COLLEGE ADMISSIONS CHEATING SCANDAL WHICH HAS HAD SEVERAL ELITE UNIVERSITIES AND PROMINENT INDIVIDUALS, INCLUDING HOLLYWOOD CELEBRITIES, WHICH HAS EMBROILED THE HIGHER EDUCATION COMMUNITY. NOW I AM QUITE SURE I DON'T HAVE TO ELABORATE EXTENSIVELY ON MY VIEWS ABOUT THE CHEATING SCANDAL, OR AS HIS CHIEF ORGANIZER REFERRED TO IT, THE SO-CALLED SIDE DOOR TO OPPORTUNITY FOR THE SONS AND DAUGHTERS OF THE WEALTHY, A DOOR THAT ONLY MONEY CAN BUY TO ATTEND AN ELITE COLLEGE OR UNIVERSITY. I WAS STRUCK ESPECIALLY BY REALLY, ALMOST IMMEDIATELY, BY THE HYPOCRISY OF THOSE WHO FOCUSED ON THE ALLEGED UNFAIRNESS OF AFFIRMATIVE ACTION, WHICH ARGUABLY, THIS UNIVERSITY KNOWS MORE ABOUT THE MANY OTHERS BECAUSE OF THE ROUTER VERSUS BULLINGER LAWSUIT OF EARLY TO THOUSAND, WHILE AT THE SAME TIME, THEY IGNORED THE ADMISSIONS FROM UNIVERSITY PREFERENCES FOR LEGACY Ã [AUDIO LOST] GRANDPARENTS, OTHER PARENTS, THEY OFTEN TOOK ON STUDENT LOAN, WITH INTEREST RATES, AND A NEW KIND OF CONSUMER DEBT WAS BORN. WHEN WE USE THE WORD CONSUMER DEBT, WHAT WE ARE REALLY REFERRING TO IS FAMILY DEBT THAT AFFECTS MULTIPLE GENERATIONS. I GUARANTEE YOU THAT THERE ARE PEOPLE IN THE AUDIENCE WHO ARE SUBSIDIZING THE EDUCATION OF THEIR OWN CHILDREN WHEN THEY ARE FACT OR MOVING, MEETING THE INDIVIDUALS HIMSELF, AND TO THEIR RETIREMENT YEARS. SO, THE GROWTH OF STUDENT LOAN DEBT HAS BECOME STAGGERING. TODAY, MORE THAN 44 MILLION PEOPLE CARRY OVER $1.5 TRILLION IN OUTSTANDING STUDENT LOAN DEBT, AN AMOUNT THAT EXCEEDS ALL OTHER TYPES OF NON-MORTGAGE LOAN DEBT. TWO OUT OF THREE GRADUATES FROM THE CLASS OF 2017 BORROWED FEDERAL STUDENT LOANS TO FINANCE THEIR EDUCATION. NOW, THIS PHENOMENON IS ESPECIALLY CONCERNING FOR THE AFRICAN-AMERICAN AND LATINO FAMILIES. NOW, I WANT TO REMIND EVERYONE THAT THIS CONFERENCE IS A CONSUMER CONFERENCE THAT TALKED ABOUT THE MORTGAGE AND RECESSION CRISIS OF TO THOUSAND WEALTH. THE ACLU HAS JUST ISSUED A NEW REPORT, AND I AM SURPRISED. I WAS AN ACLU LAWYER SO I AM SURPRISED THAT THEY DID IT BUT THEY ISSUED A REPORT THAT SAID BY 2031, AFRICAN-AMERICANS WILL HAVE, IN EFFECT, LOST LOST ABOUT $100,000 IN NET WEALTH BECAUSE OF THE RECESSION OF TO THOUSAND 8. $100,000. NOW, GUYS, WHAT WE ARE LOOKING AT, THE WEALTH IN 2013 AS A RESULT OF THE RECESSION WAS 13 TIMES LESS FOR AFRICAN-AMERICANS THAT WAS FOR THE WHITE FAMILIES, SO THE TRUTH IS, YOU ARE ALREADY STARTING FROM A PHENOMENALLY AN EQUAL POSITION MADE WORSE BECAUSE OF STRUCTURAL INEQUALITY, MADE MORE DIFFICULT BECAUSE INDIVIDUALS DO NOT HAVE THE CAPACITY TO PAY BACK THE LOANS, THOUGH AT THE TIME THEY THOUGHT THEY MIGHT. FAMILIES OF COLOR, THEY'RE MORE LIKELY TO HAVE A NEED TO BORROW FOR HIGHER EDUCATION AND IN LARGER AMOUNTS. FOLLOWING GRADUATION, THOSE WHO EARN LOWER RELATIVE INCOMES SIMPLY HAVE LESS TO WORK WITH WHICH CONTRIBUTES TO A HIGHER LIKELIHOOD OF DELINQUENCY AND DEFAULT.AND IN FACT, RECENT RESEARCH SHOWS RATHER THAN HELPING THE COMMUNITIES OF COLOR BUILD WEALTH, A COLLEGE EDUCATION WILL DEEPEN THE WEALTH GAP. FOR EXAMPLE, YOUNG AFRICAN-AMERICANS TAKE ON 85 PERCENT MORE STUDENT DEBT FOR THEIR EDUCATION THAN THEIR WHITE COUNTERPARTS, AND THAT INDEBTEDNESS INCREASES ALMOST 7 PERCENT PER YEAR AFTER LEAVING THE SCHOOL. NOW, IT IS CRITICAL TO NOTE THAT DELINQUENCY AND DEFAULT ON STUDENT LOANS HAPPENED DISPROPORTIONATELY MORE FROM PEOPLE OF COLOR AND WOMEN. A DEGREE IS NOT A SHIELD FROM DISPARITY.AFRICAN AMERICAN BACHELOR DEGREE DEFAULT AT 5 TIMES THE RATE OF WHITE GRADUATES AND ARE MORE LIKELY TO DEFAULT THAN THE WHITES WHO NEVER FINISHED A DEGREE.WOMEN GRADUATES ON AVERAGE WITH $2700 MORE IN STUDENT LOAN DEBT THAN MEN, BUT BECAUSE OF THE GENDER PAY GAP, THEY EARN ABOUT 26 PERCENT LESS. SO PAYING OFF THEIR DEBT TAKES SIGNIFICANTLY LONGER. IF YOU SET ASIDE THE QUESTION OF WHETHER OR NOT THESE INDIVIDUALS ARE SIMPLY IMMORAL, SAYING THAT THEY ARE TAKING THE LOANS WITH NO INTENTIONS TO PAY IN THE BACK NO MATTER WHAT THEIR CIRCUMSTANCES ARE, THAT IS WHAT THEY ARE DOING. YOU SET THAT ARGUMENT ASIDE BECAUSE I DO FEEL THAT THAT IS TERRIBLY UNTRUE.IN THE EVIDENCE OF THE DISPARITIES THAT WE SEE, THEY ARE DEEPLY DISTURBING AND SUGGESTED WITHOUT SOME ATTENTION, THIS PROBLEM WILL ONLY WORSEN. AND, WHILE STUDENT LOAN DEBT IS OFTEN SEEN AS A MILLENNIAL ISSUE, THE CRISIS LEAVES NO AGE GROUP UNTOUCHED. AARP IS GETTING INCREASINGLY CONCERNED ABOUT STUDENT LOAN DEBT AFFECTING THE FINANCIAL STABILITY OF OLDER AMERICANS. STUDENT LOAN DEBT HELD BY BORROWERS OVER THE AGE OF 60 INCREASED BY MORE THAN 50 PERCENT BETWEEN 2012 AND 2017. ACCORDING TO THE GAO, THE GOVERNMENT ACCOUNTABILITY OFFICE, THE INCREASE IN OH LOAN DEBT AMONG SENIORS MEANS THAT MANY MORE ARE SPENDING THEIR GOLDEN YEARS STRUGGLING BECAUSE OF THE FEDERAL GOVERNMENT'S ABILITY TO GARNISH SOCIAL SECURITY INCOME FOR THE REPAYMENT OF FEDERAL STUDENT LOAN DEBT. AND IT HAS BEEN ARGUED THAT THE INABILITY TO DISCHARGE STUDENT LOANS IN BANKRUPTCY INCREASES THE PROBLEM. NOW THERE ARE SOME EXCEPTIONS TO THE RULE BUT THE TRUTH IS THAT IF YOU CANNOT DISCHARGE THAT DEBT, YOU ARE NOW ENTERING YOUR RETIREMENT YEARS RELYING ON SOCIAL SECURITY AS YOUR PRIMARY SOURCE OF INCOME, YOU'RE IN DEEP TROUBLE, GUYS, DEEP TROUBLE. SO ACCORDING TO THE DEPARTMENT OF EDUCATION, FOR JUST ONE YEAR OF UNDERGRADUATE INSTRUCTION, AS A FULL-TIME STUDENT AT A PRIVATE OR NONPROFIT SCHOOL DURING 2017, THE 2018 ACADEMIC YEAR, THE COST AVERAGE ABOUT $28,000, AN INCREASE OF APPROXIMATELY 20 PERCENT HIGHER THAN THE PREVIOUS ACADEMIC YEAR. SIMILARLY, THE DEPARTMENT FOUND THAT THE COST OF FULL-TIME ENROLLMENT AT PUBLIC INSTITUTIONS OFFERING A 4 YEAR DEGREE ALSO ROSE FOR THE SAME 2 ACADEMIC YEARS. IN-STATE STUDENTS ENROLLED IN PUBLIC COLLEGES AND UNIVERSITIES FACE A 2 PERCENT INCREASE IN COST AMOUNTING TO $8300. OUT-OF-STATE STUDENTS ATTENDING THE SAME COLLEGES AND UNIVERSITIES FACED AN AVERAGE COST OF $28,000, AND YET, FEW EMPLOYED PEOPLE HAD CORRESPONDING INCREASES IN INCOME. NOW I WILL NOT DISCUSS THE MEDIAN INCOME OF THE VARIOUS COMMUNITIES. I HAVE THAT INFORMATION, AND IF YOU'RE INTERESTED, I'M HAPPY TO TALK WITH YOU ABOUT IT AFTER THE PANEL BUT YOU KNOW AS WELL AS I DO THAT WOMEN AND PEOPLE OF COLOR DON'T MEASURE UP TO THE MEDIAN INCOME OF WHITE FAMILIES. SO WHEN WE TALK ABOUT STUDENT LOAN DEBT WHEN THEY MIGHT BE BORROWING THE SAME AMOUNT UNDER THE SAME TERMS, THE IMPACT OF THE BORROWING HAS A DECIDEDLY DIFFERENT IMPACT ON THOSE COMMUNITIES. SO, WHILE 250 ÃOH, STUDENT LOAN DEBTS, DEFAULTS, THEY LOWER THEM BY AS MUCH AS 50 TO URBAN INSTITUTE, WHICH IS A D.C.-BASED RESEARCH ORGANIZATION. AS THE CREDIT SCORES DROP, THE COST OF ANY FUTURE CREDIT GOES UP MAKING IT HARDER FOR THE AFFECTED CONSUMERS TO MANAGE THEIR PERSONAL FINANCES. WHILE 250,000 DIRECT FEDERAL STUDENT LOAN BORROWERS DEFAULT EVERY QUARTER, AGAINST WHICH CONSUMERS ARE MOST LIKELY TO DEFAULT? WE HAVE ALREADY DISCUSSED THAT, SO I WON'T GO FURTHER BEYOND THAT. BUT BEYOND A 4 YEAR BACCALAUREATE DEGREE AND GRADUATE OF SCHOOLS, TODAY'S EDUCATIONAL OPTIONS INCLUDE VARIED CAREERS IN TECHNICAL TRAINING PROGRAMS IN SUCH FIELDS AS HEALTHCARE, COMPUTERS, COSMETOLOGY, CRIMINAL JUSTICE, FASHION DESIGN, AND THE ENTERTAINMENT BUSINESS. PROMINENT AMONG THE INSTITUTIONS OFFERING THIS EDUCATIONAL MEDLEY OF FOR-PROFIT COLLEGES THAT USE MARKETING STRATEGIES TO TARGET THE FINANCIALLY VULNERABLE CONSUMERS, THEN COMPLETE ENROLLMENT AND FINANCIAL AID APPLICATIONS AS QUICKLY AS POSSIBLE. NOW THESE INSTITUTIONS WOULD EVEN ENCOURAGE DEBT TO BEYOND WHAT IS NEEDED TO PAY TUITION AND FEES. THIS YEAR, THE CENTER FOR RESPONSIBLE LENDING FOUND THAT FOR-PROFIT COLLEGES HAVE TWIN TRAPS OF POOR OUTCOME AND COSTLY DEBT THAT TOGETHER OFTEN LEAD TO LOAN DEFAULT. ACROSS THE NATION, FOR-PROFIT COLLEGE LOAN DEFAULTS OCCUR AT A RATE 3 TIMES THAT OF STUDENTS ENROLLED IN EITHER PUBLIC OR PRIVATE INSTITUTIONS, OFFERING THE SAD RESULTS FOR THE FOUR-PROFIT STUDENTS IS THAT THEY WIND UP IN WORSE FINANCIAL CIRCUMSTANCES AFTER ENROLLMENT. ALL THEY WANTED WAS EDUCATIONAL TRAINING TO IMPROVE THEIR LIVES, AND FURTHER, FEW OF THEM, 40 PERCENT OF FOR-PROFIT STUDENTS GRADUATE 6 YEARS FOLLOWING THEIR ENROLLMENT IN 2 OR 4 YEAR CURRICULUMS. NOW UNFORTUNATELY, DEBT WAS THE PRIMARY TAKE WAY FOR THE FOUR-PROFIT COLLEGE EXPERIENCE. I WON'T GO INTO THE DETAILS INVOLVING REGULATORY ROLLBACK AND CHANGES BUT IT IS SUFFICIENT TO NOTE THAT THE PREVIOUS ADMINISTRATION ISSUED WHAT WAS KNOWN AS GAINFUL EMPLOYMENT RULES, WHICH SOUGHT TO REALLY HOLD DOWN AND REALLY HOLD UP, RATHER, TO A STANDARD OF CARE, FOR-PROFIT SCHOOLS THAT AT THIS POINT EXPLOIT A STUDENT'S BEYOND ANYTHING REASONABLE, JUST BECAUSE WE KNOW OF HIS SCHOOLING TRUMP UNIVERSITY THAT HAS SINCE GONE OUT OF BUSINESS DOES NOT MEAN THAT ALL SCHOOLS ARE BAD PER SOUTHEAST. BUT HAVING SAID THAT, THERE ARE TOO MANY STUDENTS WHO SUFFER IN THIS AREA. IT IS WORTH NOTING AND I NEED NOT MENTION OTHER VENTURES TO SAY THAT WE HAVE FOLLOWED THE FAILURES OF FOR-PROFIT SCHOOLS LIKE CORINTHIAN COLLEGES, EVEREST, ITT TECH, THAT LET STUDENT BORROWERS WITHOUT DEGREES AND CREDIT HOURS THAT COULD NOT BE TRANSFERRED, LOSSES TO TAXPAYERS WHO FUNDED OUR FEDERAL ASSISTANCE. BETSY DEVOS, WHO HAS CHOSEN TO BRING HER OWN AND INEVITABLE ANALYSIS TO THIS PROBLEM. [LAUGHTER] UNFORTUNATELY, HAS DONE VERY LITTLE TO ADVANCE THE LARGER CALLS HERE. SO THIS IS THE BACKDROP AGAINST WHICH TODAY'S EXTRAORDINARY PANELS IS BEING ASKED TO ADDRESS. IT IS MY GREAT PLEASURE TO INTRODUCE TODAY'S PANEL, INDIVIDUALS WHO I HAVE COME TO KNOW THROUGH THIS PROCESS AND I MUST SAY, THAT I HAVE DEEP ADMIRATION FOR. NOW, THEY WILL BE PRESENTING IN THE ORDER THAT I PRESENT THEM. SAMUEL LEVINE, THAT WAS A GREAT PRESENTATION THIS MORNING. THANK YOU SO MUCH FOR COMING TO THE CONFERENCE. NOW, OF COURSE SAME AS A WORTHY REPRESENTATIVE OF THE OFFICE, AND SAM WILL BE FOLLOWED BY JOSEPH SANDERS WHO IS THE SUPERVISING ATTORNEY FOR CONSUMER FRAUD BUREAU OF THE ILLINOIS ATTORNEY GENERAL'S OFFICE, AND A STUDENT LOAN OMBUDSMAN FOR THE STATE OF ILLINOIS, IT IS GREAT TO HAVE YOU HERE. FINALLY, WE WILL HEAR FROM DAN ZABEL WHO IS THE ASSISTANT DIRECTOR FOR THE SUPERVISION OF POLICY AT THE CONSUMER FINANCIAL PROTECTION BUREAU. LADIES AND GENTLEMEN, PLEASE JOIN ME IN GIVING THE ÃDID I SAY THAT WRONG? YOU WILL CORRECT IT? ALL RIGHT, OKAY, THANK YOU. IN ANY EVENT, LET ME ASK YOU TO JOIN ME IN WELCOMING ALL 3 OF OUR PANEL MEMBERS. [APPLAUSE] NOW, WE WILL HEAR FROM THEM INDIVIDUALLY. THEN I WILL POSE A COUPLE OF QUESTIONS AND ASKED THE AUDIENCE TO FOLLOW UP. SAM? Samuel Levine: WELL, I WOULD LIKE TO START BY THANKING PROFESSOR ANDERSON. IT HAS BEEN AN HONOR TO MEET ALL OF YOU AND TO WORK WITH YOU HERE. I WANT TO START WITH A DISCLAIMER THAT I HAVE WORKED WITH REPRESENTATIVE CHOPRA, BUT I DO NOT SPEAK FOR HIM. HE IS CERTAINLY ABLE TO SPEAK FOR HIMSELF AS WE FOUND THIS MORNING, OR FOR THE TRADE COMMISSION AS A WHOLE, JUST FOR MYSELF. SO WHAT I WANT TO TALK ABOUT TODAY IS SOME OF THE WORK THAT THE FTC HAS WORKED ON, TO TAKE ON THE MOST ABUSIVE ACTIONS, SOME REPRESENTED BY REPRESENTATIVE HENDERSON. THAT I HAVE A BAD NEWS PORTION OF THE TALK WITH HOW THESE ABUSES THAT THE FTC HAVE TAKEN ON ARE THE SYMPTOMS OF A MUCH BIGGER DISEASE AND HIGHER EDUCATION. WHEN IT COMES TO THE MUCH BIGGER DISEASE IN HIGHER EDUCATION, I DO FEAR THAT OUR FEDERAL GOVERNMENT IS NOT ON THE SIDE OF STUDENTS IN OUR DEPARTMENT OF EDUCATION IS NOT ON THE SIDE OF STUDENTS. THE FIRST OF THE GOOD NEWS, SO THE FEDERAL TRADE COMMISSION FOR THOSE WHO DON'T KNOW IS A BIPARTISAN FEDERAL AGENCY, COMPRISED OF 5 COMMISSIONERS WITH SOME INDEPENDENCE LIKE I SAID FROM THE ADMINISTRATION, AND WHAT WE DO IS WE ENFORCE AMONG OTHER THINGS A PROHIBITION ON UNFAIRNESS OF PRACTICES.SO IF A COMPANY IN THE MARKETPLACE CHEATS STUDENTS OR CUSTOMERS, WE HAVE THE ABILITY TO SUE THEM AND TO HOPEFULLY STOP THE PRACTICES. NOW WE HAVE USE THAT POWER IN THE HIGHER ITS SPACE IN 2 KEY AREAS OVER THE LAST YEAR, I WILL TALK ABOUT EACH IN TURN. THE FIRST IS IN THE GENERATION SPACE, THE 2ND IS IN THE STUDENT LOAN DEBT RELIEF. SO, LET ME START WITH LEAD GENERATION. IF YOU HAVE NEVER HEARD OF LEAD GENERATION, ALL THAT IS IS SOMEBODY WHO TRIES TO CONNECT THE COMPANY LOOKING FOR CUSTOMERS AND POTENTIAL CUSTOMERS.LEAD GENERATORS ARE IN THE MIDDLE TRYING TO CONNECT THEM. IN THE HIGHER EDUCATION SPACE, THIS MEANS THAT CONNECTING SCHOOLS WITH THE POTENTIAL STUDENTS. YOU MIGHT THINK TO YOURSELF, ESPECIALLY IF YOU'RE A STUDENT HERE AT THE UNIVERSITY OF MICHIGAN, THAT IS NOT HOW I RECALL GOING TO SCHOOL. I HAD TO FILL OUT AN APPLICATION BASED ON $10,000 TO TAKE MY SAT FOR ME. [LAUGHTER] JUST KIDDING! JUST KIDDING! [LAUGHTER] NO! NO, NO, NO. BUT SERIOUSLY, IN AN ELITE EDUCATION THAT IS NOT THE TRADITIONAL WAY THAT YOU APPLY TO SCHOOLS. BUT FOR MOST AMERICANS WHO ARE GOING TO SCHOOL, IT DOES NOT RESEMBLE THIS, AND THERE'S MANY SCHOOLS OUT THE ESPECIALLY THE VOCATIONAL AND FOR-PROFIT PROGRAMS WHO USE LEAD GENERATORS TO CONNECT THEM WITH THE POTENTIAL RECRUITS. SO THE FTC WENT AFTER A PARTICULARLY BAD LEAD GENERATOR LAST YEAR CALLED SON KEY. AND ACCORDING TO OUR COMPLAINT, WHAT SENTI DID WAS BASICALLY THE IMITATED MILITARY RECRUITERS, AND SET UP WEBSITES LIKE ARMY ENLISTED.com AND NAVY ENLISTED.com PUT ADS ON GOOGLE THAT SAID, ENLISTED IN THE NAVY AND SERVE YOUR COUNTRY. FOR THE STUDENTS WHO WANTED TO SERVE THEIR COUNTRY, THEY CAME ACROSS THE WEBSITES AND THOUGHT THAT THESE GUYS WERE THE MILITARY, AND THESE GUYS HAD GIVEN YOUR PERSONAL INFORMATION WE CAN GET YOU IN TOUCH WITH YOUR OPTIONS. SO THE STUDENTS LOOKING TO SERVE THEIR COUNTRY CALL UP Ã EXCUSE ME, THEY PUT IN THEIR PERSONAL INFORMATION AND GET A CALL FROM SOMEBODY WHO CLAIMS TO BE A MILITARY RECRUITER AND SAID HEY, IT IS GREAT THAT YOU'RE INTERESTED IN THE ARMY BUT THE ARMY IS DOWNSIZING. HAVE YOU THOUGHT ABOUT GOING TO ONE OF THE SCHOOLS THAT THE ARMY RECOMMENDS? AND THEN IF THE COMPANY IS SUCCESSFUL IN CONNECTING A SCHOOL TO THAT STUDENT, THAT SCHOOL WILL PAY SENTI $15-$40 A LEAD, DIRECTLY AND INDIRECTLY. NOW, THIS IS AN OUTRAGEOUS PRACTICE THAT IS STEERING PEOPLE WHO WANT TO SERVE THEIR COUNTRY INTO PREDATORY SCHOOLS, NOT NECESSARILY FOR PROFIT. BUT PREDATORY SCHOOLS THAT CLEARLY DON'T HAVE THEIR BEST INTEREST AT HEART. I AM PROUD THAT THE FTC SHOT THIS SCAM DOWN AND FORCE THEM TO TURN OVER A WEBSITE AND BY THE WAY, DID THE COMMISSIONER POINTS EARLIER, SUED THE INDIVIDUALS WHO RAN THE SCAM AND NOT JUST THE COMPANY, AND THEY ARE NOW UNDER A PERMANENT INJUNCTION. BUT IT IS IMPORTANT TO UNDERSTAND WITH THE LEAD GENERATION SPACE ÃI WILL GET TO THAT LATER BUT WHAT ABOUT THE SCHOOLS THAT WERE BUYING THESE LEADS? WE KNOW THAT THERE WERE DOZENS OF SCHOOLS WHO DECIDED THIS IS AN OKAY WAY TO RECRUIT STUDENTS. WHAT I AM GOING TO TALK ABOUT HOW THAT IS THE NEXT BATTLE WE NEED TO FIGHT FOR THE SCHOOLS WHO THINK THAT IT IS ACCEPTABLE TO PRAY ON STUDENTS IN THE WAY THAT THEY DID THROUGH SON KEY. WE ARE GOING TO GET TO THAT IN A MINUTE.THE 2ND AREA THAT I THINK THAT THE FTC HAS BEEN ACTIVE IS IN STUDENT LOAN DEBT RELIEF. YOU MIGHT NOT OF HEARD OF STUDENT LOAN DEBT RELIEF, BUT I AM SURE YOU HAVE HEARD FROM STUDENT LOAN DEBT RELIEF OPERATORS. IF YOU HAD GOTTEN A PHONE CALL IN THE LAST 5 YEARS FROM AN UNKNOWN NUMBER, IT MIGHT HAVE SAID THAT THERE IS AN OBAMA FORGIVENESS PROGRAM THAT INSPIRES TOMORROW, PRESS ONE. YOU CAN SEE ALL OF YOUR LOANS FORGIVEN. NOW IF YOU HAD PRESS ONE AND SPOKEN TO SOMEONE, THAT SOMEONE IS A STUDENT LOAN DEBT RELIEF OPERATOR EXCEPT THEY WILL PROBABLY CLAIM THAT THEY ARE WITH THE DEPARTMENT OF EDUCATION AND PROBABLY CLAIM THAT TO GET YOUR LOANS FORGIVEN ARE YOUR LOAN PAYMENTS REDUCED, YOU WILL NEED TO PAY THEM $1000 A MONTH, THEN $40 A MONTH FOR THE NEXT 40 YEARS. NOW, THE INTERESTING THING Ã AND JOE WILL TALK ABOUT THIS MORE, THAT THESE DEBT RELIEF COMPANIES DID ACTUALLY ÃIF YOU PAY THEM THE $1000, OFTEN PUT STUDENTS INTO INCOME-BASED REPAYMENT PROGRAMS THAT LOWER THEIR PAYMENTS, BUT THE REALITY IS THAT THESE ARE FREE PROGRAMS. THESE ARE FREE TO ENROLL IN, GOVERNMENT PROGRAMS THE TAXPAYERS PAY FOR. NOW THESE COMPANIES WERE ABLE TO DO THIS FOR 2 REASONS. A, THEY LIED TO STUDENTS. AND BE, BECAUSE THE SERVICERS, THE ACTUAL STUDENT LOAN SERVICERS WHO WE PAY TO MANAGE THE PORTFOLIO OF STUDENT LOANS ARE NOT DOING THEIR JOB. NOW JOE WILL TALK MORE ABOUT THAT. BUT THE FTC TOOK ON THESE DEBT RELIEF COMPANIES AND HAVE SHUT A LOT OF THEM DOWN. I DO THINK THAT THAT IS A GOOD THING BUT ONE THING THE COMMISSIONER HAS SAID AND THAT I AM MAKING IS THAT THIS IS A SYMPTOM OF A MUCH DEEPER PROBLEM. I WANT TO GET INTO WHAT I SEE AS 2 OF THE CORE STRUCTURAL WEAKNESSES IN HIGHER EDUCATION TODAY THAT ARE HURTING AMERICAN STUDENTS. THE FIRST IS SCHOOLS THAT ARE TREATING STUDENTS AS NOTHING MORE THAN A SOURCE OF REVENUE. THE 2ND IS THE TOTAL LACK OF ACCOUNTABILITY FOR THE OUTCOMES OF THESE SCHOOLS ARE DELIVERING FOR THEIR STUDENTS, A TOTAL LACK OF ACCOUNTABILITY AGAINST THE SCHOOLS. SO FIRST I WOULD LIKE TO TALK ABOUT THE IDEAS OF STUDENTS AS REVENUE. IF YOU ARE AN AMERICAN CITIZEN, YOU HAVE A BIRTHRIGHT ESSENTIALLY TO TENS OF THOUSANDS OF DOLLARS IN FEDERAL LOANS, THANKS THANKS ABOUT 5700 OR $500 FOR FEDERAL GRADUATES PRETTY CAN TAKE THE 60 GRAND ANYWHERE YOU WANT BASICALLY. YOU CAN'T GO TO TRUMP UNIVERSITY WITH IT, BUT YOU COULD GO TO A LOT OF THE HIGHER END SCHOOLS. WELL, WE LIVE IN AN ENTREPRENEURIAL COUNTRY AND THERE'S A LOT OF PEOPLE WHO THOUGHT ABOUT THIS SYSTEM OF HIGHER ED FINANCING AND THOUGHT, GEE, I COULD MAKE A LOT OF MONEY LIKE THIS. I CAN SET UP A SCHOOL AND EVERY WARM BODY THE WALKS IN THE DOOR CAN BRING IN TENS OF THOUSANDS OF DOLLARS WHICH IS EXACTLY WHAT HAS HAPPENED IN THE COUNTRY OVER THE LAST 30+ YEARS. THERE WAS A SCHOOL THAT JOE AND I WERE INVOLVED IN PROSECUTING. IT WAS CONCEIVED OF AT HARVARD BUSINESS SCHOOL AS A WAY TO MAKE A QUICK BUCK. THAT WAS THE CONCEPTION OF THE SCHOOL AND THAT IS EXACTLY HOW THESE SCHOOLS OPERATE. THEY ARE ONE GENERALLY FOR-PROFIT. THEY USE LEAD GENERATORS LIKE SON KEY TO CONNECT THEM TO CUSTOMERS, THEN THEY HAVE ADMISSIONS COUNSELORS. UNLIKE AN ADMISSION COUNSELOR AT THE UNIVERSITY OF MICHIGAN, IF YOU ARE AN ADMISSION COUNSELOR AT A PREDATORY FOR-PROFIT SCHOOL, YOU'RE NOT A ADMISSIONS COUNSELOR AT ALL BUT A SALESMAN. THEY LITERALLY HIRE THESE FOLKS FROM THE USE SAILED DEALERSHIPS. WE HAVE SEEN THE RECORDS AND THEY ARE TRUE, THEY ARE USED CAR SALESMAN SELLING PEOPLE EDUCATION. OF THESE SALESPEOPLE UNDERSTAND, BECAUSE THEY ARE NOT DUMB AT ALL, THEY UNDERSTAND THAT EVERY STUDENT IS LIKE A NEW LEXUS FOR THE COMPANY THAT THEY WORK FOR. AND I DID NOT MAKE THAT APPEAR THAT WAS IN THE TRAINING FOR THESE COUNSELORS AT THE SCHOOL THAT I REFERENCED EARLIER. EVERY STUDENT YOU RECRUIT IS A NEW LEXUS. WHEN YOU HAVE THOSE KIND OF INCENTIVES IN PLACE, EVERY STUDENT THAT YOU CAN BRING ON IS LIKE ACTUALLY SELLING A LEXUS, OF COURSE THERE WILL BE FRAUD AND DECEIT. OF COURSE YOU WILL HIRE COMPANIES LIKE SON KEY, THESE LEAD GENERATORS TO BRING IN AS MANY WARM BODIES AS YOU CAN. YOU HAVE AN OVERWHELMING ECONOMIC INCENTIVE TO COMMIT FRAUD SO WE SHOULD NOT BE SURPRISED WHEN FRAUD IS EXACTLY WHAT HAPPENED. AS PROFESSOR HENDERSON REFERENCED, AND THIS IS WHERE I GET INTO THE ISSUE ABOUT THE FEDERAL GOVERNMENT, THE OBAMA ADMINISTRATION REALLY MADE AN EFFORT TO CRACK DOWN THE DECEPTION TO STUDENTS. THEY DID A NUMBER OF THINGS. ONE THING THAT I WANT TO TALK ABOUT THE JOE WAS VERY INVOLVED WITH WAS A RULE THAT BASICALLY SAID IF THE SCHOOL LIED TO YOU IN THE COURSE OF THE ENROLLMENT, YOU SHOULD NOT HAVE TO KEEP PAYING YOUR LOANS. YOU SHOULD GET A DISCOURSE OF YOUR LOANS AND RECOURSE AGAINST THE SCHOOL AND THAT THE DEPARTMENT OF EDUCATION COULD TAKE SOME ADMINISTRATIVE ACTION AGAINST THE SCHOOL AS WELL. THIS IS A VERY BASIC RULE WHAT THAT WOULD NOT SOLVE THE PROBLEMS I WAS DESCRIBING HER FUNDAMENTALLY CHANGED THE OVERWHELMING INCENTIVES THAT I AM DESCRIBING BUT IT WOULD'VE Ã I THINK THAT WOULD'VE MOVED THE NEEDLE AND MADE THINGS A LITTLE BETTER AND LESS SLANTED AGAINST STUDENTS. WELL, INSTEAD OF MOVING THE BALL FORWARD ON THIS, THE CURRENT ADMINISTRATION IS ROLLING IT BACK. UNFORTUNATELY FOR THOSE OF US WHO CARE ABOUT STUDENTS, THERE IS A REAR TO FIGHT GOING ON BY THE STATES AND THE PRIVATE PLAINTIFFS LIKE VEINS GROUP TO TRY TO STOP THE TRUMP ADMINISTRATION FROM WATERING DOWN AND ROLLING BACK THESE RULES. BUT MY BROADER POINT IS THAT I WISH WE COULD SAY WE WERE MOVING FORWARD ON ACTUALLY MAKING SURE THAT SCHOOLS DON'T LIE TO THEIR STUDENTS BUT I DO FEAR THAT WE ARE ACTUALLY MOVING BACKWARD. NOW GIVEN THE INCENTIVES THAT I HAVE DESCRIBED, THAT IS A REAL PROBLEM. THE 2ND BIG FAILURE, THE 2ND BIG, BIG FAILURE IN HIGHER EDUCATION IS THE LACK OF ACCOUNTABILITY FOR OUTCOMES. I WILL GO BACK TO THE SCHOOL THAT JOE AND I WERE INVOLVED IN PROSECUTING, AND THIS WAS A SCHOOL THAT CHARGED $80,000 FOR A BACHELORS DEGREE THAT BY THE WAY, WAS NOT RECOGNIZED BY GRADUATE SCHOOLS OF MOST EMPLOYERS. WELL, THE CONSEQUENCE WAS SOMEWHAT PREDICTABLE. THE VAST MAJORITY OF THE STUDENTS WHO ENROLLED AND NOT GRADUATE. THOSE WHO GRADUATED COULD LOOK TO A MEDIAN INCOME OF $23,000 WHICH IS COMPARABLE, I BELIEVE IT IS LESS, THEN WHAT A HIGH SCHOOL DROPOUT WOULD'VE BEEN EXPECTED TO EARN BUT THESE GUYS WERE STUCK WITH $80,000 IN DEBT. NOW FOR THE PRIVATE LENDING THE PROFESSOR HENDERSON DESCRIBED, OUT A LOAN FROM THE SCHOOL DEFAULTED. THIS WAS A TRAIN WRECK FOR STUDENTS. THIS SCHOOL DESTROYED THE LIVES OF THOUSANDS OF STUDENTS, EVEN AS THEIR PRIVATE EQUITY OWNERS REAPED TENS OF MILLIONS OF DOLLARS YEAR AFTER YEAR. THAT LACK OF ACCOUNTABILITY, THAT SYSTEM IN WHICH YOU CAN DESTROY LIVES AND DELIVER HORRENDOUS OUTCOMES AS LONG AS YOU KEEP BRINGING IN WARM BODIES, AS LONG AS YOU HAVE THAT KIND OF INCENTIVE STRUCTURE IN PLACE YOU WILL HAVE STUDENT LOAN DEBT RELIEF OUTFITS SPRINGING UP BECAUSE PEOPLE ARE DESPERATE WITH NO INCOME, $100,000 IN DEBT, AND THEY ARE DESPERATE. WHEN YOU HAVE DESPERATION, WE HAVE FRAUD. IF YOU WANT TO STOP THE DESPERATION AND STOP THE FRAUDSTERS AT THE CORE, THEN WE NEED SOME ACCOUNTABILITY FOR THE SCHOOLS ARE PUTTING THE STUDENTS INTO DESPERATE STRAITS IN THE FIRST PLACE. ONCE AGAIN I WILL ECHO MY REFRAIN FROM BEFORE. THE OBAMA ADMINISTRATION TRIED TO DO SOMETHING ABOUT THIS. PROFESSOR HENDERSON REFERENCED IT. A LOT OF US OF THE STATE OF THE DEPARTMENT OF EDUCATION WERE INVOLVED. THERE WAS A GAINFUL EMPLOYMENT RULE.IT WASN'T SO RADICAL. IT SAID IF YOU ARE A SCHOOL THAT IS TAKEN MILLIONS OF DOLLARS OF FUNDS IN YOUR STUDENTS CANNOT REPAY THEM THAT MAYBE YOU DON'T NEED TO GET FEDERAL FUNDS. THIS WAS TO PROTECT STUDENTS BUT ALSO TAXPAYERS. WHY ARE WE SUBSIDIZING THESE PRIVATE EQUITY SCHOOLS THAT ARE DESTROYING STUDENTS LIVES? ONCE AGAIN, THE SAME OLD STORY. THAT RULE IS BEING RULED BACK. IT HAS BEEN FROZEN. A LOT OF IT IS IN THE COURSE RIGHT NOW, BUT ONCE AGAIN, GAINFUL EMPLOYMENT WOULD NOT OF SOLVED THE LACK OF ACCOUNTABILITY BUT IT WOULD'VE MOVED US IN THE RIGHT DIRECTION. INSTEAD WE ARE MOVING IN THE WRONG DIRECTION WITH A REARGUARD ACTION WITH PEOPLE LIKE JOE AND DAN WHO WERE JUST TRYING TO STOP THE DAMAGE. SO I WOULD LIKE TO CONCLUDE WITH THIS. COMMISSIONER CHOPRA HAS TALKED A LOT ABOUT HERE AND ELSEWHERE THAT TO BE AN EFFECTIVE REGULATOR, YOU CANNOT JUST DEAL WITH THE SYMPTOMS OF PROBLEMS. YOU NEED TO ADDRESS THIS CORE DISEASE. STUDENT LOAN DEBT RELIEF, THESE ARE SYMPTOMS OF MUCH BIGGER PROBLEMS IN STUDENT EDUCATION. WE NEED TO GET AT THE CORE DISEASE, THE PROFIT MOTIVE. THE LACK OF ACCOUNTABILITY. TREATING STUDENTS LIKE NOTHING MORE THAN ATMS WHICH IS WHY I AM SO GLAD TO BE JOINED ON THE PANEL BY JOE AND DAN BECAUSE THEY ARE ON THE FRONT LINES OF GETTING NOT ONLY AT THE WORST ABUSES, BUT ALSO THE CORE PROBLEMS OF HIGHER EDUCATION THAT ARE ENDANGERING AMERICAN STUDENTS, SO THANK YOU, VERY MUCH. [APPLAUSE] HI, EVERYONE. I'M JOE SANDERS WITH THE ONLINE OFFICE. LIKE SAM, I NEED TO LET EVERYBODY KNOW THAT THE VIEWS THAT I AM EXPRESSING ON MY OWN. I DO NOT SPEAK FOR OR BIND THE OFFICE OF THE ATTORNEY GENERAL. AND I WANT TO THANK THE FORD CENTER, THE UNIVERSITY OF MICHIGAN FOR HAVING ME HERE TODAY. I WANT TO THANK MY PANELISTS. I AM REALLY HONORED TO BE ON A PANEL WITH SO MUCH KNOWLEDGE ABOUT STUDENT LOANS AND THE PROBLEMS HERE. AND I WANT TO THANK COMMISSIONER CHOPRA, THE FORMER STUDENT LOAN OF OMBUDSMAN CHOPRA. NOW I AM STILL HERE, STANDING ON THE SHOULDERS OF ALL UGIANTS. . [LAUGHTER] PICK. OKAY, SO I AM GOING TO BUILD ON WHAT SAM TALKED ABOUT. TIM WAS TALKING ABOUT SCHOOLS AND WHERE THE LOANS ÃTHE PRODUCT THAT THE LOANS ARE PAYING FOR, THE PROBLEMS THAT ARE THERE. NOW I AM ALSO GOING TO TOUCH ON THE DEFAULT THE PROFESSOR HENDERSON TALKED ABOUT BECAUSE FOR FEDERAL STUDENT LOANS, THERE ARE PROTECTIONS IN PLACE THAT SHOULD MAKE DEFAULTS ZERO. INCOME DRIVEN REPAYMENT IS A REPAYMENT SYSTEM THAT, BASED ON YOUR INCOME, IF YOU DON'T MAKE VERY MUCH MONEY, YOUR PAYMENT IS LITERALLY ZERO DOLLARS. NOW THAT IS CONSIDERED INTO THE REPAYMENT STATUS. YOU HAVE THESE REPAYMENT STATUSES FOR 20 OR 25 YEARS, THEN THE LOAN IS FORGIVEN. WITH THE EXISTENCE OF THESE PROGRAMS, SOME OF WHICH SAM HAS ACTUALLY HELPED TO CREATE THE NEGOTIATING COMMITTEE FOR THE DEPARTMENT, WHY SHOULD THERE BE STUDENT LOAN DEFAULTS. WHY SHOULD ANYBODY DEFAULT WHEN THERE ARE PROTECTIONS IN PLACE? THERE IS A HOST OF REASONS HERE. BUT I AM GONNA TALK PRIMARILY ABOUT A LARGE LUMP THAT HAS TO DO WITH THE COMPANIES THAT INTERFACE BETWEEN THE STUDENT AND THE U.S. DEPARTMENT OF EDUCATION, JUST THE PRIMARY LENDER A FEDERAL STUDENT LOAN, THOSE OF THE STUDENT LOAN SERVICERS. THESE SERVICERS HAVE MISALIGNED INCENTIVES WHERE WHAT IS GOOD FOR THE SERVICER IS NOT NECESSARILY GOOD FOR THE STUDENT OR THE DEPARTMENT OF EDUCATION. ON THE SERVICEMAN BASICS BECAUSE IT'S EASY TO GET DEEP INTO THE WEEDS, KIND OF THE NEEDY AND GRITTY FAST. SO JUST SOME BASELINE STUFF, THERE'S MULTIPLE KINDS OF FEDERAL REPAYMENT PLANS.WHEN YOU FIRST ENTER REPAYMENT ON YOUR FEDERAL STUDENT LOANS, YOU WILL BE ON A TENURE REPAYMENT PLAN THAT TAKES THE PRINCIPAL, LOOKS AT THE PAYMENT RATE, AMEX RISES IT OVER 10 YEARS, AND THOSE ARE THE PAYMENTS OF THE INITIALLY HAVE TO START MAKING. IF YOU'RE HAVING TROUBLE MAKING THE PAYMENT AMOUNT, YOU CAN EXTEND THE TERM TO 30 YEARS AS LONG AS YOU LOWER THE PAYMENT, IT WILL DECREASE THE PAYMENTS THAT YOU MAKE OVERTIME. THEN THERE ARE ALSO THE INCOME DRIVEN REPAYMENT PLANS. THERE IS A HOST OF THESE, BUT THE BASIC IDEA IS THAT YOU PAY INCOME. AND YOU DO THIS OVER A PERIOD OF TIME, AND ANY AMOUNT OF REVIEW THAT YOU HAVE IS FORGIVEN. NOW, THAT STRUCTURE IS UNIQUE. YOU DON'T SEE A LOT OF FINANCIAL PROJECTS THAT ARE STRUCTURED IN THAT WAY. ONE WAY TO THINK ABOUT THIS IS IT IS MORE OF A TAX ON INCOME THAN IT IS A LOAN. YOU PAY A CERTAIN AMOUNT OF THE INCOME FOR A CERTAIN AMOUNT OF TIME AND THAT IS YOUR OBLIGATION. THERE'S A HOST OF SCHOLARSHIPS OUT THERE THAT GO INTO DETAIL ON THAT BUT I DO THINK THAT IT IS A HELPFUL DETAIL AS WE REMEMBER WHAT IT IS THAT WE ARE TALKING ABOUT HERE. I THINK THAT HONESTLY, DEPARTMENT OF EDUCATION COULD DO A BETTER JOB Ã [AUDIO LOST] SO GOING THROUGH THESE FACTORS TAKES SOME TIME. YOU NEED TO FIGURE OUT THE FACTS TO GO THROUGH THE PLAN. AN ALTERNATIVE TO THE INCOME DRIVEN PLAN, IF YOU'RE HAVING TROUBLE MAKING THIS IS THE FORBEARANCE, WHICH IS SOMETHING THAT DOES NOT HAVE ALL OF THE REFERENCE QUESTIONS, RIGHT? THIS IS JUST SOMETHING THAT YOU WERE ALLOTTED A CERTAIN AMOUNT OF. YOU COULD SAY, I WOULD LIKE A FORBEARANCE. THEY DON'T HAVE TO MAKE THE FORBEARANCE FOR YOU USUALLY A PERIOD OF MONTHS, BUT YOU COULD QUICKLY ADD UP TO THESE OVER THE YEARS. NOW, ANOTHER BASIC, WHAT IS A STUDENT LOAN SERVICER? NOW THE DEPARTMENT OF EDUCATION DEFINES STUDENT LOAN SERVICES ON THEIR WEBSITE. SOME KEY POINTS, THE DEPARTMENT SAID THAT THE LOAN SERVICER WILL WORK WITH YOU ON REPAYMENT PLANS. IF YOUR CIRCUMSTANCES CHANGE AT ANY TIME DURING YOUR REPAYMENT PERIOD, YOUR LOAN SERVICER WILL BE ABLE TO HELP HER BUT THE DEPARTMENT IS THAT IF YOU CAN'T MAKE YOUR PAYMENT, CALL YOUR LOAN SERVICER. NOW, SERVICERS OFTEN PARENT THESE EXACT SAME STATEMENTS, RIGHT? THEY HOLD THEMSELVES OUT ON AS EXPERTS FOR REPAYMENT OF LOANS, SO THEY WILL SAY ÃTHIS IS THE REPORT OF THE SERVICER WEBSITE, IF YOU ARE EXPERIENCING PROBLEMS MAKING LOAN PAYMENTS, PLEASE CONTACT US. WE CAN HELP YOU IDENTIFY SOLUTIONS THAT CAN MAKE THE RIGHT DECISION FOR YOUR SITUATION, RIGHT? SO THEY ARE OFFERING NUANCED AND EXPERT HELP ON WHAT KIND OF REPAYMENT PLAN YOU SHOULD BE IN. NOW, GETTING MORE TO THE CONCLUSION HERE, WHAT ARE THE SERVICERS INCENTIVES? THE SERVICER'S MAIN CAUSE FOR A LARGE COST OF THE SERVICERS ARE CALL CENTERS, WHICH ARE LARGE OPERATIONS WHERE YOU HAVE A LOT OF PEOPLE ON THE PHONE ANSWERING INCOMING CALLS FROM STUDENT LOAN BORROWERS WHO EXTENSIVELY, SOME OF WHICH NEED HELP ON REPAYMENT OPTIONS. SERVICERS CAN REDUCE THEIR COST SIGNIFICANTLY BY REDUCING THE CALL TIME THAT THEY HAVE ON EACH CALL. AND THAT THEY INCENTIVIZE THEIR REPRESENTATIVES ACCORDINGLY. IF YOU HAVE SHORT AVERAGE CALL TIMES, THEN YOU ARE ELIGIBLE FOR BONUSES. WHAT THIS MEANS IN PRACTICE IS THAT THE CALL REPRESENTATIVES ARE INCENTIVIZED NOT TO GO THROUGH A LONG PERIOD OF QUESTIONS THAT YOU NEED TO ANSWER IN ORDER TO FIGURE WHERE YOU SHOULD BE FOR INCOME REPAYMENT BUT INSTEAD, OFFER FORBEARANCE AS QUICKLY AND OFTEN BECAUSE YOU CAN DO IT IN UNDER 5 MINUTES. THIS HARMS BORROWERS. YOU NEED TO MAKE 20 YEARS OF QUALIFYING PAYMENTS ON AN INCOME DRIVEN PLAN IF YOU WILL GET LOAN FORGIVENESS. SO EACH MONTH THAT YOU ARE IN A FORBEARANCE, INTEREST IS CONTINUING TO ACCRUE.YOU ARE LOSING TIME TOWARDS THE FORGIVENESS. THAT RIGHT THERE, YOU START TO SEE WHY STUDENTS DEFAULT. BECAUSE INSTEAD OF GETTING INTO THE PLANS THAT ARE AFFORDABLE THAT WILL ULTIMATELY PAY OFF THE LOAN OVER A PERIOD OF TIME, THEY ARE PUTTING THEM INTO A SERIES OF FORBEARANCES THAT WILL ULTIMATELY INCREASE THE LOAN BALANCE AND DON'T GET THE BORROWER ANY CLOSER TO ULTIMATE REPAYMENT. IN DEFAULT ON A FEDERAL STUDENT LOAN. AND, ONCE BORROWERS WHO DO NOT UNDERSTAND THE SYSTEM RUN AT A FORBEARANCES, THAT IS REALLY THE COUNTDOWN UNTIL THE DEFAULT. NOW, EVEN WHEN SOMEBODY GETS INTO AN INCOME DRIVEN PLAN, IF YOU GO IN AND YOU KNOW WHAT YOU'RE LOOKING FOR AND YOU TELL THE SERVICER THAT YOU KNOW WHAT YOU WANT, YOU FORCE THIS ISSUE, THERE'S A SERIES OF HURDLES AND PROBLEMS THAT COME UP IN THE INTERACTION WITH THE SERVICER. SO FOR EXAMPLE, EACH YEAR NEEDS TO RESEARCH IN ORDER FOR THE DEPARTMENT OF EDUCATION TO CALCULATE REPAYMENT. SO IF YOU HAVE THIS MUCH MONEY WHEN YOUR YOU MIGHT BE ON A ZERO DOLLAR PAYMENT OR A NEW JOB WITH MORE, YOU HAVE TO RECALCULATE SO THAT YOU ARE CONTRIBUTING WHAT YOU CAN FROM YOUR INCOME. IF YOU FAIL TO RECERTIFY YOUR INCOME, AT THE ALLOTTED TIME, YOU ARE KICKED OUT OF THE PROGRAM WHICH HAS NEGATIVE CONSEQUENCES FOR BORROWERS RIGHT AWAY. NUMBER ONE, YOUR PAYMENT WILL GO UP DRAMATICALLY. NUMBER 2, THERE IS INTEREST CAPITALIZATION.SO THE INTEREST WAS ACCRUING AS I PLAYED LESS, THE ZERO DOLLAR PAYMENT, OR LESS, IT IS ACCRUING IN THE BACKGROUND. WHEN I DROPPED OUT OF THE INCOME DRIVEN PLAN, THAT INTEREST CAPITALIZES TO THE TOP OF THE LOAN. NOW THAT AMOUNT IS USED TO CALCULATE THE INTEREST GOING FORWARD, SO YOU'RE INCREASING THE AMOUNT OF INTEREST THAT IS CREATED FROM THE LOAN. THERE ARE INTEREST SUBSIDIES WHERE THE GOVERNMENT WILL PAY THE PAYMENTS FOR A PERIOD OF TIME. YOU LOSE THOSE IF YOU DON'T PAY FOR YOUR LOAN. NOW ONE OF THE PROBLEMS THAT WE SEE IS THAT THE COMMUNICATIONS ON WHEN THESE RECERTIFICATION DATES COME OUT ARE NOT CLEAR. INSTEAD OF A SUBJECT LINE THAT SAID, HEY, YOU NEED TO RECERTIFY YOUR INCOME NEXT MONTH, IT WILL SAY, YOU HAVE A NEW DOCUMENT ON YOUR KNOBBY AUNT WEBSITE. CLICK THROUGH.THEN YOU HAVE TO GO FIND YOUR PASSWORD AND WE HAVE ALL THAT WITH THIS AND IT IS REALLY A BLOCK TO THE STUDENTS SUCCESSFULLY RECERTIFYING. NOT ALL SERVICER COMMUNICATIONS ARE DONE IN THAT MANNER. WHEN YOU OWE YOUR BILL, THEY WILL SAY HEY, YOUR PAYMENT IS DUE SO PAY US. THEN IT IS MUCH MORE SPECIFIC INFORMATION. SO, AGAIN, PROBLEMS ON THE SERVICING SIDE. WE SEE THIS WITH PRIVATE LOANS. WITH PRIVATE LOANS, YOU OFTEN HAVE TO HAVE A COSIGNER.MOST PRIVATE STUDENT LOANS ARE UNDERWRITTEN ON THE COSIGNER, NOT THE STUDENT, BECAUSE THE STUDENT DOES NOT HAVE SUFFICIENT CREDIT HISTORY WITH MORE INCOME AFTER A DEGREE, SO THE COSIGNERS OFTEN ASK FOR THAT. IN SELLING THE LOANS IN THE COSIGNERS, IT IS OFTEN HIGHLIGHTED THAT THE COSIGNER CAN BE RELEASED THROUGH A SERIES OF CONSECUTIVE AND ON-TIME PAYMENTS BUT UNFORTUNATELY, WHAT CONSTITUTES ON-TIME FOR THE COSIGNER RELEASE IS OFTEN DIFFERENT THAN WHAT CONSTITUTES ON-TIME IN TERMS OF WHETHER YOU ARE DELINQUENT, SO YOU COULD MAKE A PAYMENT THAT IS ON TIME AND NOT IN A DELINQUENCY, BUT IS NOT CONSIDERED ON TIME FOR COSIGNER RELEASE. SO FOR EXAMPLE YOU WOULD GET A YOUR PAYMENT IS DUE AT THE 10TH OF THE MONTH, THEN YOU'RE FINE. THAT DOES NOT COUNT AS ON-TIME FOR COSIGNER RELEASE, SO A LOT OF PARENTS AND OLDER INDIVIDUALS AS HIGHLIGHTED IN THIS INDUSTRY GET STUCK IN THESE LOANS THAT THEY WERE TOLD THEY WOULD BE ABLE TO GET OUT OF BED OR NOT BECAUSE OF THE SEMANTICS USED. ANOTHER PROBLEM THAT WE SEE IS THE PRESENT AMOUNT DUE. SO YOU MIGHT CALL UP YOUR SERVICE AND SAY, I AM BEHIND. WHAT DO I NEED TO DO TO GET CURRENT ON THE LOAN. THE SERVICERS RESPOND IN SOME INSTANCES THAT WE HAVE SEEN IS, YOUR PRESENT AMOUNT DUE IS Ã THEN THEY GIVE YOU A FIGURE. THE PRESENT AMOUNT DUE AS DEFINED BY THE SERVICER IS NOT THE SAME AS THE AMOUNT TO BRING YOU CURRENT. THE PRESENT AMOUNT DUE IS THE AMOUNT THAT IS CURRENT PLEASURE NEXT PAYMENT, AND THIS IS NOT AT ALL CLEAR TO THE BORROWERS. SO, THESE MISALIGNED SERVICES ARE ONE OF THE PROBLEMS THAT WE FACE, AND WE ARE GOING TO TALK A LITTLE BIT BRIEFLY AS I WRAP UP HERE ABOUT WHAT THE STATES HAVE DONE TO ADDRESS THESE PROBLEMS. SO, THE FIRST THING IS THAT OFFICES LIKE MINE WITH THE ATTORNEY GENERAL HOW BROAD LAWSUITS. ILLINOIS, WASHINGTON, PENNSYLVANIA, HAVE ALL SUED NAVIANT FOR SOME OF THE PRACTICES THAT I HAVE JUST DISCUSSED. NOW, THERE ARE ALSO A SERIES OF STUDENT LOAN SERVICING LAWS, AND THESE ARE ROLES THAT ARE DESIGNED TO GET THE EXACT SAME CONDUCT, SO FOR EXAMPLE, ILLINOIS PASSED A LAW THAT JUST WENT INTO EFFECT ON DECEMBER 31 OF LAST YEAR, ONE OF THE THINGS THAT IS REQUIRED IS THAT IF YOU'RE A BORROWER WHO IS AT RISK, SOMEBODY WHO IS GOING TO MAY BE DID NOT COMPLETE THEIR DEGREE, SERVICERS ARE REQUIRED TO HAVE A SPECIALIST THERE THAT REALLY KNOWS THE INCOME DRIVEN PLAN, AND SERVICERS ARE NOT ALLOWED TO PRESENT FORBEARANCE IS THE ONLY REPAYMENT OPTION. SO THERE'S A SERIES OF REGULATIONS THAT ARE DESIGNED TO CORRECT SOME OF THESE INCENTIVE PROBLEMS. AND THEN, OUR LAW ALSO CREATED AN INVESTMENT PROGRAM. ANOTHER THING THAT STATES CAN DO, AND THERE IS A GOOD EXAMPLE OF THIS, IS TO CORRECT SOME OF THE PROBLEMS WITH THE FEDERAL SERVICERS, AT THE STATE LEVEL. IT COULD BE DONE AT THE FEDERAL LEVEL. THERE'S SOME GRIDLOCK RIGHT NOW WITH THE HIGHER EDUCATION, AND THEY'RE DOING WELL TO LOOK AT PROGRAMS LIKE PROVIDING STUDENT LOAN AUTHORITIES, STATE LENDING PROGRAMS, 2 TOUCHSTONES THEY ARE. FIRST, RHODE ISLAND SERVICES THEIR LOANS AND HOUSE WHICH INCREASES THEIR CASH FLOW AND ALIGNS THE INCENTIVE FOR THE BORROWER AND THE LENDER IN THAT RHODE ISLAND WAS TO KEEP STUDENTS CURRENT AND I WANT THEM IN FORBEARANCES, THEN FALLING INTO DEFAULT. THEY DO WANT THEM TO KEEP PAIN. NUMBER 2, RHODE ISLAND HAS A SINGLE IDR PROGRAM. SO IF YOU START TO HAVE PROBLEMS WITH REPAYMENT, THERE IS ONE PROGRAM. YOU TALK TO THE SERVICER WHO WORKS FOR THE STATE AGENCY THERE. THEY SAY OKAY. THEY WILL PUT YOU INTO THE INCOME PLAN AND THERE'S LESS FRICTION ON THAT PLAN SO I DO THINK THAT THERE ARE SOME GREAT STATE PROGRAMS OUT THERE. [APPLAUSE] GOOD AFTERNOON. MY NAME IS DAN ZIBEL. I AM THE CHIEF COUNSEL OF THE NATIONAL STUDENT EVENTS AT WORK. WE ARE AN ORGANIZATION, A NONPROFIT ORGANIZATION THAT IS ABOUT ONE YEAR OLD. WE ARE DEDICATED TO THE ISSUES OF CONSUMER PROTECTIONS REALLY, ACROSS THE STUDENT AID CYCLE FOCUSING ON ISSUES. SOME OF THE STUDENT LOAN SERVICING ISSUES AS WELL. IT IS REALLY GREAT TO BE HERE TODAY. I WANT TO THANK PROFESSOR BURNS WITH THE LAW SCHOOL, I AM AN ALUM OF THE LAW SCHOOL, JUST MORE WALKING AROUND OR OVER THE PAST 24 HOURS, IT HAS BEEN NOSTALGIC AND FANTASTIC. BUILDINGS LIKE THESE WERE NOT HERE WHEN I WAS IN SCHOOL, SO THIS IS A PRETTY FANTASTIC SET UP. NOW I THINK THAT AS PROFESSOR HENDERSON SAID, THE CRISIS HERE IS HUGE, RIGHT? WE HEAR THE $1.5 TRILLION NUMBER ALL THE TIME, ABOUT 1 TRILLION IN GROWTH OVER THE LAST DECADE ALONE, MORE PEOPLE ARE BORROWING. MORE PEOPLE ARE BORROWING MORE. THE AVERAGE STUDENTS ARE AVERAGING MORE MONEY, THE DELINQUENCY RATES ARE HIGH, BANKRUPTCY IS VIRTUALLY IMPOSSIBLE TO OBTAIN, AND THERE'S LOTS AND LOTS OF CAUSES FOR THAT. I THINK MAYBE THERE ARE FEWER SOLUTIONS RIGHT NOW BUT I WANT TO OFFER SOME COMMENTS AND THOUGHTS ON THE ROLE OF THE U.S. DEPARTMENT OF EDUCATION IN ALL OF THIS. THAT IS SOMETHING WE NOT HAVE BEEN FOCUSING THAT MUCH ON, AND I OFFER THESE THOUGHTS FREELY AS SOMEBODY WHO WORKED THERE, SPENDING 3 YEARS IN THE GENERAL COUNSEL'S OFFICE FOCUSING ON THE ISSUES OF HIGHER ED. REPRESENTATIVE CHOPRA WAS THERE, A LITTLE BIT UNDER SECRETARY DUNCAN AND JAMES, AND THE END OF MY TIME UNDER THE CURRENT ADMINISTRATION. JUST FOR THE FIRST CHUNK OF THAT, I HAVE SERVED ON THE OBAMA ADMINISTRATION'S INTERAGENCY TASK FORCE ON FOR-PROFIT EDUCATION.WE HAD HELP TO DO A LOT OF THINGS THAT I THINK SOME OF THE OTHER PANELISTS WERE REFERRING TO DURING THE LAST FEW YEARS OF THE ADMINISTRATION, STARTING TO OPERATIONALIZE THE GAINFUL EMPLOYMENT REQUIREMENTS THAT HAD BEEN A MULTIYEAR EFFORT IN THE COURSE BACK DOWN TO THE AGENCY, BACKUP TO THE COURTS, AND FINALLY, IT WAS REALLY GETTING GOING. WE DESIGNED A ENFORCEMENT UNIT FOR THE FOUR-PROFIT AND OTHER PREDATORY UNITS OF HIGHER EDUCATION, AND THAT THERE WAS A LOT GOING ON. THERE'S A LOT GOING ON WITH THE STUDENT LOAN DEBT RELIEF. A LOT WAS GOING ON IN THE ENFORCEMENT ACTION AGAINST SOME OF THE BIG ACTORS. CORINTHIAN, ITT, MANY OF THESE ACTORS WERE ENGAGED IN SIMILAR OR ALMOST IDENTICAL BEHAVIOR AS CORINTHIAN AND ITT HAD USED THAT VERY FEW PEOPLE IN THIS ROOM HAVE EVER HEARD WHAT THESE SCHOOLS ARE. BEAUTY AND TRADE SCHOOLS, OTHER TYPES OF TRADE SCHOOLS, FOR-PROFIT LAW SCHOOLS. THERE IS A WHOLE HOST OF PLAYERS WHO NEVER GOT THE KATA PRESS THAT CORINTHIAN AND ITT DO, BUT THEY ARE OUT THERE. AND I THINK THAT THEY OFTEN GET OVERLOOKED REALLY BECAUSE OF THE SIZE AND SCOPE AND THEIR ATTENTION SPAN PALES ON THE ISSUES. IN CONTRAST, THE DEPARTMENT OF EDUCATION OVER THE LAST FEW YEARS HAS TAKEN A VERY DIFFERENT APPROACH. THERE HAS BEEN A LOT IN THE WORLD OF REGULATORY ROLLBACKS. AS WE MENTIONED A LITTLE BIT, THE GAINFUL EMPLOYMENT RULE WHICH WAS REALLY DESIGNED TO BE A VALUE PROPOSITION. OUR STUDENTS TAKING OUT A LEVEL OF DEBT THAT IS COMMENSURATE WITH HER EARNINGS? A DEBT TO RATIO LEARNING, THAT RULE WAS IN EFFECT AND IS STILL THE LAW OF THE LAND BUT IS NOT BEING ENFORCED BY THE CURRENT DEPARTMENT OF EDUCATION, AND THE DEPARTMENT HAS PROPOSED IN AN MPR M THAT CAME ABOUT ONE YEAR AGO, THE NOTICE OF RULEMAKING TO ESSENTIALLY SELECT ALL AND DELETE THE RULE. THE DEPARTMENT HAS UNLAWFULLY REFUSED TO IMPLEMENT RULES DESIGNED TO PROVIDE AUTOMATIC DEBT RELIEF TO THE PEOPLE WHO WENT TO COLLEGES, LARGELY FOR-PROFIT COLLEGES BUT ALL COLLEGES WHO CLOSED WHILE THEY WERE THERE. THAT WAS THE SUBJECT OF LITIGATION, AND THE DEPARTMENT WILL FINALLY BEGIN TO IMPLEMENT THAT RELIEF. WE ARE SEEING THE FRUITS OF LITIGATION JUST IN THE LAST FEW MONTHS. THE DEPARTMENT HAS UNLAWFULLY DELAYED THE DEFENSE ROLE, INCLUDING THE CLASS ACTION WAIVER, THE BAND OF CLASS ACTION WAIVERS AND MANDATORY ARBITRATION THE THE DEPARTMENT BUT IN IN 2016, THE DEPARTMENT HAS SAID UNDER SECRETARY DEVOS, TO DELAY THE IMPLEMENTATION OF THAT RULE BUT THAT HAS BEEN FOUND TO BE ILLEGAL. THE DEPARTMENT DELAYED WHAT IS CALLED THE STATE AUTHORIZATION RULE WHICH IS DESIGNED TO PROTECT THE STUDENTS WERE ENROLLING IN ONLINE INSTITUTIONS OF HIGHER EDUCATION. I DO BELIEVE THAT THAT IS ALSO UNLAWFUL AND WE DO HAVE A SUMMARY JUDGMENT ARGUMENTS IN ABOUT 3 WEEKS IN CALIFORNIA WHERE A JUDGE WILL MAKE THE DECISION. THE DEPARTMENT HAS REVERSED COURSE ON ONE OF THE MOST CONTROVERSIAL PREDATORS OF FOR-PROFIT COLLEGES, AN ORGANIZATION CALLED A CICS. THAT WAS SOMETHING THAT SECRETARY CAN GET THE DEAL END OF THE OBAMA ADMINISTRATION SAID YOU'RE NOT DOING YOUR JOB WELL ENOUGH. YOU ARE NO LONGER FIT TO BE SERVED AS A DEPARTMENT RECOGNIZED CREDITOR, FOR PRACTICAL PURPOSES MEANS THAT YOU CANNOT GET ÃIS A SCHOOL THAT IS ACCREDITED BY THAT ACCREDITOR, IF THEY ARE NOT RECOGNIZED BY THE DEPARTMENT, THEN YOUR STUDENTS ARE NO LONGER ELIGIBLE TO GET 8, PELL GRANTS AND DIRECT LOANS. SO THEY WERE OUT. A CICS WAS OUT THEM BACK IN, AND QUITE REMARKABLY, EVEN AFTER LETTING IT BACK IN, EVEN WHEN THEY LEAD IT BACK AND IT BECAME CLEAR THAT THE DEPARTMENT ACTUALLY BELIEVED THAT THEY DID NOT MEET THE FEDERAL STANDARDS FOR COMPETENCY, FOR CONFLICT OF INTEREST, BUT LOAN DEFAULT, THEY ARE BY THE SAME RATE DEPARTMENT OF EDUCATION.THE DEPARTMENT HAS EFFECTIVELY DISMANTLED THE ENFORCEMENT UNIT DESIGNED TO FERRET OUT THE KINDS OF BEHAVIOR THAT WE HAVE BEEN HEARING ABOUT. THEN ON THE STUDENT LOAN SERVICING SIDE, WE HAVE SEEN THE DEPARTMENT ARGUE FORCEFULLY THE STATE CONSUMER PROTECTION LAWS, THEY CANNOT TO BE USED AGAINST STUDENT LOAN SERVICERS. SO THAT IS TRYING TO STOP THE KIND OF LAWSUITS THAT ILLINOIS AND JOE HAVE BEEN BRINGING AGAINST NAVIENT AND OTHER STATES, TRYING TO STOP THE LOSSES OF THE PRIVATE CLASS ACTION LAWSUITS AND PLAINTIFFS HAVE USED AGAINST STUDENT LOAN SERVICERS. THE PLAINTIFFS HAVE MADE THE ARGUMENT IN THE FEDERAL REGISTER, THAT THE STUDENT LOAN SERVICERS ARE LATCHING ONTO THAT. YOU CAN QUERY THE LEVEL OF RELATIONSHIP THERE. BUT THAT IS THE ARGUMENT THAT IS BEING MADE IN THE COURTS, AND IT HAS BEEN HAVING LIMITED SUCCESS. I THINK THAT EVERY STATE IN SHE HAS BEEN ABLE TO FEND OFF THIS PRESUMPTION ARGUMENT BUT THERE'S A COUPLE OF CASES THAT HAVE COME OUT THE WRONG WAY, AND THEY ARE NOW IN THE COURTS OF APPEAL, INCLUDING ONE THAT I ARGUED LAST OCTOBER, I THINK AS WE WAIT FOR A RULING FROM THE SEVENTH CIRCUIT ON THAT. SIMILARLY, THIS LOGIC ALSO APPLIES TO THE KINDS OF STUDENT LOAN SERVICING BILLS THAT JOE WAS TALKING ABOUT THE DEPARTMENT SAYING TO STATES, HANDS-OFF REGISTRATION, LICENSING, HIS OFFER STUDENT LOAN SERVICERS, THE FEDERAL CONTRACTORS THAT STATED YOU HAVE NO RULE IN PREDICTING THE STUDENTS IN THIS SPACE. AND ON TOP OF THAT, ON THE STUDENT LOAN SERVICING FRIEND, THERE IS A RECENT REPORT FROM THE DEPARTMENT OF EDUCATION'S OFFICE AND INSPECTOR GENERAL THAT SAID AN AD IS NOT ACTUALLY DOING A GOOD ENOUGH JOB SELF POLICING THE LOAN SERVICERS. SO YOU HAVE THE IDEA THAT THAT YOU ARE NOT DOING A GOOD ENOUGH JOB ALL THE WHILE, THE DEPARTMENT OF EDUCATION IS THAT NOBODY ELSE IS ALLOWED TO OVERSEE THE SERVICERS. SO, WHO IS LEFT? AS WE THINK ABOUT THAT ISSUE, AND JOE DID MENTION BRIEFLY THAT THE HIGHER EDUCATION ACT IS CURRENTLY BEING DEBATED FOR REAUTHORIZATION, I THINK THAT THERE IS A FUNDAMENTAL QUESTION THAT HAS TO BE ASKED. THAT IS, WHAT COULD HAVE BEEN DONE IN THE STUDENT LOAN SPACE, RIGHT? IF WE LOOK BACK AT THE ORIGINS OF STUDENT LOANS, I DO THINK THAT THE MODERN SYSTEM COULD HAVE DATED BACK TO POST-WORLD WAR 2, THE G.I. BILL, LARGELY A GRANT SYSTEM. THE GOAL IS OPPORTUNITY IN PROVIDING ACCESS, ABOUT STUDENT AND EDUCATION WORKFORCE TRAINING. OBVIOUSLY, A LOT HAS CHANGED SINCE THEN. HE DID NOT HAVE THE DEPARTMENT OF EDUCATION BACK THEN. THAT CAME ABOUT IN THE LATE 70s WERE THERE WERE STILL PEOPLE WHO WORK WITH THE DEPARTMENT OF HEALTH AND EDUCATION WELFARE, WHO ACTUALLY HAD AN AMAZING AMOUNT OF KNOWLEDGE ABOUT THAT TIME. NOW, I THINK IT WAS IN THE LATE FEDERAL OFFICE OF STUDENT AID WAS GREETED THROUGH THE ALCOR REINVENTING GOVERNMENT CONTEXT DESIGNED TO GIVE GREATER FLEXIBILITY TO THE AGENCY TO ACT A LITTLE MORE BUSINESSLIKE. AND THEN, LATER, THE TO THOUSAND 8 FINANCIAL CRISIS, THE GOVERNMENT SWITCHES TO ENTIRELY DIRECT LOAN SYSTEM RATHER THAN THE SYSTEM OF GUARANTEED COMMERCIALLY MADE LOANS UNDER THE FEDERAL FAMILY EDUCATION PROGRAM. SO THAT IS A LOT OF CHANGE, RIGHT? NOW, THE QUESTION REALLY IS, WHERE IS THE DEPARTMENT IN ALL OF THIS? IS THIS THE KIND OF DEPARTMENT, AS CONSTITUTED RIGHT NOW, REALLY HAS THE ABILITY TO OVERSEE IN A WAY THAT IS EFFECTIVE? ONE OF THE THINGS THAT HAS AFFECTED ME IN THE PAST 24 HOURS AS I SAT IN A ROOM, WITH SO MANY FINANCIAL EXPERTS, THE WAY THAT A LOT OF PEOPLE HAVE TALKED ABOUT BANKS AND THE SUPERVISORY AUTHORITY, ALL OF THE CONSUMER PROTECTION THAT SORT OF GOES WITH THE COMPLICATED COMMERCIAL LENDING PRODUCTS LIKE AUTO LOANS AND PAYDAY LOANS, YOU SPEND TIME WITH THE DEPARTMENT OF EDUCATION, AND THEY'RE TALKING A DIFFERENT LANGUAGE ABOUT THEIR CUSTOMERS WERE USUALLY THE SCHOOLS, OR THEIR CUSTOMERS ARE THE SERVICERS. WE ARE ALL JUST NODDING ALONG BUT I THINK THAT THERE ARE TONS OF WELL-MEANING PEOPLE AT THE DEPARTMENT OF EDUCATION, BUT IT REALLY IS A DIFFERENT CONVERSATION THAT IS HAPPENING THERE, AND IS NOT A FOCUS ON HOW TO BEST PROTECT STUDENTS, BUT THE PROTECTION OF TAXPAYERS.WHETHER IT IS WORKING OR NOT THAT WE COULD TALK ABOUT. BUT A LOT OF IT IS TALKING ABOUT PROTECTING AND ENABLING THE SCHOOLS. WELL, WE CAN'T SHUT THE SCHOOL DOWN BECAUSE WHAT ABOUT THE STUDENTS WHO GO THERE RIGHT NOW? THE CONVERSATION IS NEVER ABOUT THE STUDENTS WILL GO THERE IN TWO YEARS, 3 YEARS, 5 YEARS? IT'S ABOUT THE STUDENTS THAT ARE THERE TODAY AND RIGHT NOW? HOW DO WE PROTECT THEM? THERE'S NOT A CONVERSATION ABOUT WHETHER THAT IS IN THE BEST INTEREST AT LARGE. NOW THERE ARE EXCEPTIONS TO THIS. I THINK THAT THERE WERE EXCEPTIONS IN THE LAST FEW YEARS OF THE OBAMA ADMINISTRATION WHEN YOU SAW CARINTHIA, ITT, EVEN RECENTLY WE HAVE HAD EXCEPTIONS TO THAT. AND EVEN THIS ADMINISTRATION I THINK HAS A TIPPING POINT WITH SOME OF THE ARGOSY UNIVERSITY THAT COMES TO MIND JUST IN THE PAST FEW WEEKS, WHERE THE DEPARTMENT OF EDUCATION HAS SAID, ENOUGH IS ENOUGH. THERE IS INDICATION THAT SHE CANNOT FIND $16 MILLION OF FEDERAL MONEY, THAT IS ENOUGH FOR US TO FINALLY PUT YOU OUT OF BUSINESS OR AT LEAST TAKE AWAY THIS TITLE FOR AID. BUT I DO THINK THAT THERE IS A FUNDAMENTAL QUESTION TO SAY, WHAT IS THE ROLE OF THE DEPARTMENT? IN THE STATUTE RIGHT NOW THE DEPARTMENT HAS A ROLE IN CONTRACTING SERVICERS, OVERSEEN SERVICERS, OVERSEEING CREDITORS IN SCHOOLS, DECIDING WHICH SCHOOLS CAN PARTICIPATE IN TITLE IV, WHICH SCHOOLS CANNOT PARTICIPATE IN TITLE IV.WHICH CREDITORS CAN CREDIT, WHAT DO REPAYMENT PLANS LOOK LIKE? ALL OF THAT MEANS IS THAT THE DEPARTMENT OF EDUCATION IS THAT THE CENTRAL FOCUS POINT OF A $1.5 TRILLION STUDENT DEBT PORTFOLIO. AND AS I HEAR THESE CONVERSATIONS THAT GO ON IN D.C. ABOUT THE AREA AUTHORIZATION, THERE'S A LOT OF PROPOSALS AT THE MARGINS. THEY ARE GOOD PROPOSALS AND CONVERSATIONS THAT WE ABSOLUTELY HAVE TO BE HAVING ABOUT THINGS LIKE, AND INCENTIVE-BASED COMPENSATION FOR RECRUITER SCHOOLS, THE FEDERAL 9010 RULE, THE USE OF PRIVATE ACTION, ALL THINGS THAT GET DISCUSSED, BUT I WOULD LIKE TO SEE FROM THE OUTSIDE IS, YOU KNOW, IS A BROADER CONVERSATION? WHAT ARE WE DOING HERE AND WHAT IS THE ROLE OF THE DEPARTMENT? WHAT HAS THE DEPARTMENT TRIED TO EDGE OUT? FROM THEIR ROLE IN POLICING STUDENT LOAN SERVICING COMPANIES? WHAT ARE THE ROLES OF STATES, STATES THAT ARE PROVEN TO HAVE A GREAT ABILITY IN THIS SPACE, AND SHOULD PROBABLY HAVE MORE OF AN ABILITY IN THIS SPACE, BUT THEY ARE UNDER RESOURCED AS WELL, SO HOW DO WE BRING THAT ALL TOGETHER INTO A SYSTEM THAT WORKS FOR STUDENTS?AND WITHIN THE DEPARTMENT OF EDUCATION, WHAT CAN BE DONE MORE ON THE SUPERVISORY SIDE, THE MONITORING SIDE, THE PROGRAM COMPLIANCE? THE SAME PEOPLE ARE LOOKING AT THE FINANCES OF INSTITUTIONS, AND ARE ALSO LOOKING AT WHETHER OR NOT THEY ARE MEETING CAMPUS SECURITY REQUIREMENTS? THESE ARE VERY DIFFERENT THINGS WITH VERY DIFFERENT SKILLS. NOW, I SHOULD NOT NECESSARILY BE THE PEOPLE CHECKING THE BOX TO MAKE SURE THAT THEY HAVE ALL OF THE BLUE LIGHTS, BUT ALSO THAT YOU ARE NOT LYING TO STUDENTS DURING RECRUITING, 2 DIFFERENT SETS THAT ARE REQUIRED DURING THIS. THERE'S A LOT OF 2 NEED TO BE DONE ON ALL OF THESE ISSUES, AND REALLY, I HAVE FAILED IN ASKING QUESTIONS BUT NOT PROVIDING A LOT OF ANSWERS. BUT I DO THINK THAT THIS IS A CONVERSATION THERE REALLY NEEDS TO HAPPEN MORE. I THINK AS PROFESSOR HENDERSON HAS SAID, THE TRAVESTY HERE IS WITH THE STUDENTS. WE HAVE ALL HEARD FROM SO MANY STUDENTS HAVE BEEN SO DEEPLY IMPACTED BY THESE ISSUES IN THEIR LIVES, AND THEY ARE JUST CLOBBERED WITH DEBT, YOU KNOW? THIS IS ÃTHEY ARE TRULY SOLD HOPE, BUT IN THE END, NOT ONLY ARE THEY NOT GIVEN THE PROMISE OF HOPE, THEY ARE LEFT PAYING FOR WITH NOTHING TO SHOW FOR IT. ALL RIGHT! [APPLAUSE] THANK YOU, DAN, AND THANK YOU TO OUR OTHER CANDIDATES, NO, I WENT TO PICK UP ACTUALLY THIS ISSUE WITH THE DEPARTMENT OF EDUCATION. IT DOES SEEM THAT THE DEPARTMENT IS CAPTIVE OF THE STUDENT LOAN SERVICES, WHICH BY THE WAY, FOR THE MEMBERS OF THE AUDIENCE, OVER THE PAST 5 YEARS OR SO, THERE HAVE BEEN COMPLAINTS ABOUT STUDENT SERVICES THAT ARE HORRIBLE. IT'S JUST DOCUMENTED, BUT THERE ARE DIFFICULTIES THAT THE INDIVIDUAL STUDENTS IS ARE EXPERIENCING. I'M TRYING TO GET THE PROPER INFORMATION TO TRULY UNDERSTAND, BUT I THINK THE MODERATOR FROM HER LAST PANEL | [LAUGHTER] I THINK THAT WE ALL WENT TO ÃTHIS CONVERSATION NEEDS TO HAPPEN. BUT SINCE THE DEPARTMENT REALLY HAS THIS ACTIVITY, INCLUDING AN EFFORT TO PREEMPT BOTH STATE AND OTHER FEDERAL AGENCIES, IT REALLY IS AT THE CRUX. FIRST, I WANT TO MAKE CERTAIN THAT WE ARE ON THE SAME PAGE. WOULD YOU ALL AGREE THAT THE DEPARTMENT IS TRYING TO RESOLVE THIS ISSUE? FOR THINGS TO BE CHANGED? YES, NO, THEY MAKE ALL OF THE LOANS. RIGHT? THEY APPROVED THE SCHOOLS IN THE CREDITORS AND HAVE ALL OF THE MONEY, THEY READ ALL THE RACE AND ENFORCE THE RAKES, AND THEY THINK NOBODY ELSE CAN DO IT. I THINK THAT THAT IS POWER. I DO THINK THAT THAT IS VERY TRUE. IT IS A PHILOSOPHICAL QUESTION, AND IF ANYBODY WANTS TO ANSWER THAT'S FINE, BUT THE FIRST PHILOSOPHICAL QUESTION IS, WHY IS THE FEDERAL GOVERNMENT MAKING A PROFIT ON STUDENT LOANS, AND WHY, GIVEN THE MAGNITUDE OF THE DEBT, THE INDEBTEDNESS, THE $1.5 TRILLION, 44 MILLION PEOPLE, WHY IS THE FEDERAL GOVERNMENT SEEKING TO MAKE A PROFIT ON SOMETHING THAT SHOULD BE AN INVESTMENT IN THE NATION? THAT IS AN ISSUE THAT LOOMS LARGE, THAT ENTIRE QUESTION. WE WILL GET BACK TO THAT ARUBA WILL TRY TO ADDRESS THAT. BUT, TRYING TO REFORM THE DEPARTMENT OF EDUCATION, NO ONE OF THE ORGANIZATION THAT I AM FAMILIAR WITH IN D.C. AGREES THAT IT IS A NONGOVERNMENTAL ORGANIZATION, AND ADEQUATE SCOPE, CAN REALLY ANSWER THAT. NOW I AM LOOKING AT CONGRESS, AND THEIR SYSTEM THAT IS ACHIEVING EVERYTHING, WE HAVE TO HAVE BY PARTISANS. YOU CAN TAKE, YOU KNOW, THE VOTES OF ONE PARTY, IN THE SENSE THAT DEMOCRATS HAVE CONTROLLED THE HOUSE OF REPRESENTATIVES, AND THAT COULD MAKE A DIFFERENCE AS WE DO SEE THE REFORM GOING FORWARD, BUT IF YOU'RE REALLY TRYING TO ACCOMPLISH SOMETHING MEANINGFUL AND PERMANENT, YOU WILL HAVE TO HAVE SOME BIPARTISAN SUPPORT. THAT IS GOING TO BE A KEY ISSUE. SO I AM GOING TO ENCOURAGE EVERYONE TO SORT OF THINK ABOUT THE CHALLENGE OF REALLY DOING THAT. THANK YOU VERY MUCH. SO, HOW DO WE DO THAT? HOW DO WE DO THAT? I'M JUST TRYING THIS OUT THERE? ARE THERE ANY IDEAS? IT IS VERY TRUE THAT THE STATES AND LABORATORIES HAVE CHANGED IN THE AREA. THE STATES REALLY ARE FAR AHEAD OF THE FEDERAL GOVERNMENT, AND LOOKING FOR MEANINGFUL CHANGE, BUT OBVIOUSLY, IF THE STATES ARE PREEMPTED FROM DEALING WITH SOME OF THE ISSUES THAT WE HAVE TALKED ABOUT, THEY, TOO, WILL HAVE DIFFICULTIES. ANY IDEAS ON THESE LOANS? I THINK THAT THERE ACTUALLY MIGHT BE A GLIMMER OF HOPE IN SOMETHING THAT YOU SAID DURING THE TALK. IT DID NOT SOUND HOPEFUL BUT I THINK FROM A POLITICAL ECONOMY PERSPECTIVE, IT MIGHT BE. HE POINTED OUT THAT EVEN AARP, THE AARP, IS NOW CONCERNED ABOUT THE ISSUES. AND I DO THINK THAT THAT SPEAKS A DEEPER PROBLEM IN THE SPACE AND THAT OUR POLITICAL SERVICE DOES NOT SERVE YOUNG PEOPLE WELL. IT DOESN'T. YOU CAN SAVE IT IS BECAUSE WE DON'T VOTE OR ÃI SAY WE. I DON'T KNOW IF I SHOULD STILL SAY WE. [LAUGHTER] BUT YOU CAN SAY THAT IT IS BECAUSE YOUNG PEOPLE DO NOT VOTE OR BECAUSE THEY DO NOT CONTRIBUTE TO POLITICAL CANDIDATES BUT THE REALITY IS THAT OUR POLITICAL SYSTEM DOES NOT ÃWHAT IS HAPPENING TO STUDENTS NOW, WHAT WE HAVE ALL BEEN TALKING ABOUT, WE WOULD NEVER LET THIS HAPPEN TO SENIORS. WE WOULD NEVER LET IT HAPPENED. NOW THAT IT IS TALKING TO SENIORS, THERE MIGHT BE HOPE. THIS COULD BE A WAKE-UP CALL, A BIPARTISAN WAKE-UP CALL.THIS IS NO MORE ACCEPTABLE FOR YOUNG PEOPLE THAN IT IS FOR THE OLDER AMERICANS. AND I THINK THAT THE SENIORS POINT IS RELEVANT. AS THE OMBUDSMAN, I DO TAKE IN THE COMPLAINTS ON THE STOCK. AND THE AMOUNT OF PARENTS A CALL IN WITH PARENT PLUS LOANS AS COSIGNERS WITH THEIR OWN DEBT IS REMARKABLE. YOU GET A LOT OF OLDER PEOPLE WHO ARE ENGAGED AND HAVE THIS PROBLEM. NOW, I DO THINK THAT Ã REPEATING THE SENIORS THING, ANOTHER THING THAT WE HAVE NOT TALKED ABOUT OUR VETERANS IN THE MILITARY. YOU HAD MENTIONED A LITTLE BIT, AND THE RECRUITING, THE LEAD GENERATION, BUT THERE IS A HUGE INCENTIVE BUILT IN, PARTICULARLY FOR THE FOUR-PROFIT COLLEGES, TO TARGET THE VETERAN POPULATIONS, SOMETHING THAT IS CALLED THE FOR-PROFIT COLLEGES CANNOT GET MORE THAN 90 PERCENT OF THE REVENUE FROM THE U.S. DEPARTMENT OF EDUCATION. LET ME SAY THAT AGAIN. FOR-PROFIT COLLEGES CANNOT GET MORE THAN 90 PERCENT OF THEIR REVENUE FROM THE DEPARTMENT OF EDUCATION, BUT STILL, THAT REQUIRES A LOOPHOLE. ONE OF THE LOOPHOLES IS THAT THE DEPARTMENT OF DEFENSE AND THE DEPARTMENT OF THE ÃTHE VA DEPARTMENT, THAT MONEY DOES NOT COUNT TOWARDS THE 90 PERCENT. SO THE G.I. BILL FUNDS COUNT TOWARDS THE TIMBER DID THAT MAKE THE G.I. BILL FUNDS INCREDIBLY VALUABLE. IN THE DEPARTMENT OF DEFENSE PROGRAMS, THAT IS A VERY PROFITABLE FOR THE FOR-PROFIT COLLEGES. SO FOR ONE, THE PERCENTAGE OF VETERAN POPULATIONS THAT ARE THERE ARE GOING TO BE YOUR THAT. WE NEED PEOPLE WHO ARE EXPERTS IN THIS FROM THE EXPERTS AND OTHER TYPE OF LENDING PRODUCTS TO REALLY BE FOCUSED ON THIS ISSUE. THIS IS NOT NECESSARILY AN ISSUE THAT THE HIGHER EDUCATION COMMUNITY CAN SOLVE ON HIS OWN, BUT THE PEOPLE WHO DO HAVE A FAMILIARITY WITH, YOU KNOW, HOW WE LOOK AT AND THINK OF MORTGAGES? HOW DO WE THINK OF ALL OF THESE OTHER PRODUCTS? WHAT LESSONS CAN WE DRAW FROM THEM? WHAT LESSONS CAN WE DRAW FROM THE OTHER REGULATORS TO THINK ABOUT HOW BEST THE DEPARTMENT OF EDUCATION, IF INDEED IT IS THE DEPARTMENT OF EDUCATION, BUT HOW BEST TO OVERSEE AND MONITOR THE STUDENT LOAN SERVICERS? WELL, I THINK THAT YOU HAVE MADE A NUMBER OF GREAT POINTS, GUYS. AND I WOULD SAY, WITH YOUR OBSERVATION OF THE AARP AND THE OTHER VETERAN GROUPS, THERE'S TO OTHER ELEMENTS IN WASHINGTON THAT I THINK ARE GOING TO COME TOGETHER AS A PART OF A NEW POTENTIAL COALITION THAT CAN HELP TO ADDRESS THESE ISSUES. OBVIOUSLY, THE GROUPS REPRESENTED HERE ARE A PART OF THE DISCUSSION. AND THE ORGANIZATIONS, THE CIVIL RIGHTS COMMUNITY, BUT YOU ALSO HAVE THE HOME BUILDERS THAT ARE EXPRESSING GREAT CONCERN THAT INDIVIDUALS WHO MAY BE ELIGIBLE TO PURCHASE HOMES ARE DELAYING THEIR PURCHASES ON AVERAGE BY 7 YEARS BECAUSE OF STUDENT LOAN DEBT. YET THE NATIONAL ASSOCIATION OF REALTORS WHO ARE REALLY CONCERNED ABOUT THEIR ABILITY TO CONTINUE TO KEEP THE HOME MARKET BUILD. WITH ALL OF THAT, I DO SEE THE POSSIBILITY OF A NEW EMERGING COALITION COMING TOGETHER IN PART BECAUSE OF THE REAUTHORIZATION OF THE HIGHER EDUCATION ACT WHICH WILL LIKELY BE THE LEGISLATIVE VEHICLE AT THE FEDERAL LEVEL THAT WILL, AT LEAST, ONE OF THE CENTRAL ELEMENTS OF ADDRESSING THESE ISSUES.SECONDLY, AGAIN I WANT TO MENTION THE IMPORTANCE OF BIPARTISANSHIP. I WOULD SAY THAT CLEARLY THE SENATE WILL BE A BIG CHALLENGE IN MOVING THE LEGISLATION FORWARD. BUT I AM ENCOURAGED BY THE FACT THAT LAMAR ALEXANDER, CHAIR OF THE EDUCATION COMMITTEE OF THE SENATE, THE HEALTH AND EDUCATION COMMITTEE IS COMMITTED TO REAUTHORIZING THE HIGHER EDUCATION ACT STUPID LAMAR ALEXANDER HAS A HISTORY IN THIS AREA, AND I DO THINK THAT HE SHOULD CERTAINLY BE LIFTED UP BECAUSE IN ISSUES OF CIVIL RIGHTS IN THE EDUCATION CONTEXT, HE HAS BEEN A LEADER. HE AND PATTIE MURRAY THE SENATOR FROM WASHINGTON ARE THE CHAIR AND RANKING MEMBERS OF THE COMMITTEE AND I DO HAVE A SENSE OF OPTIMISM THAT THEY WILL AT LEAST EXAMINE THESE ISSUES CLOSELY, IF WE CAN BRING ADEQUATE ATTENTION TO THE MATTER.BUT WE ARE GOING TO HAVE TO GET THE ATTENTION OF CONGRESS ON THIS ISSUE, AND WE WILL HAVE TO DO IT BEYOND WHAT WE HAVE DONE SO FAR IN PROVIDING GENERAL INFORMATION. I THOUGHT THAT THIS PANEL WAS SO WONDERFUL BECAUSE A LOT OF THIS INFORMATION HAS BEEN KNOWN AS A GENERAL MATTER, BUT PULLING IT TOGETHER IN A SINGLE FORMER WE HAVE HAD A CONVERSATION LIKE THIS IS A RARITY, AND I DO THINK THAT WE SHOULD TAKE ADVANTAGE OF IT. ONE OF THE HOPES THAT I HAVE HAD COMING OUT OF THIS IS THAT THERE WILL BE A FOCUSED AND DETAILED REPORT ON THE ROLE OF THE DEPARTMENT OF EDUCATION THAT WILL BE, IN ESSENCE, SHARED BY A NUMBER OF DIFFERENT CONSTITUENCIES, AND OWNERSHIP THAT THEY WILL SIGN ONTO IT, TO HELP PROMOTE IT, AND THAT THEY WILL BRING THIS REPORT AND FOCUS ON THE ROLE THAT THE DEPARTMENT IS PURSUING AND NOT PURSUING TO THE ATTENTION OF A BROADER PUBLIC. I THINK RIGHT NOW, SECRETARY DIVORCE GETS AWAY WITH MANY OF HER ACTIONS BECAUSE THEY ARE A PART OF SEVERAL GROUPS OF THINGS THAT SHE IS DOING, SOME OF WHICH WE DO HAVE A DISAGREEMENT WITH, BUT NONE OF IT HAS REALLY PIERCED THE CONSCIOUSNESS OF POLICYMAKERS IN WASHINGTON. NOW UNTIL WE DO THAT, WE WILL HAVE A PROBLEM. SO I AM LOOKING TO BRING PEOPLE TOGETHER TO LAY OUT IN ESSENCE A DETAILED ANALYSIS OF THE FAILURES OF THE DEPARTMENT IN ADDRESSING THESE ISSUES THEY CAN ENJOY THE SUPPORT CERTAINLY OF THE NGO COMMUNITY IN WASHINGTON, AND MANY OTHER INFLUENTIALS. SECONDLY, I WOULD THINK JUST AS THE STATE ATTORNEYS GENERAL'S, SEVERAL OF THEM, HAVE BANDED TOGETHER IN COLLECTION ACTION OF THE PAST, THAT HAVING THE STATES ATTORNEYS GENERAL'S JOY IN AN EFFORT TO HIGHLIGHT THE WRONGFUL ROLE OF THE DEPARTMENT OF EDUCATION COULD BE HELPFUL. I ASSUME THAT | YES, SHE HAS STEPPED IN.WE DO HAVE A NEW ATTORNEY GENERAL IN ILLINOIS, THE ATTORNEY GENERAL, HE HAS BEEN Ã CONTINUING TO PUSH ON THESE ISSUES AND, YOU KNOW, WE HAVE A LOT OF IDEAS THAT I THINK CAN SERVE AS A TEMPLATE ON THE FEDERAL LEVEL. YEAH. HE STATES OBVIOUSLY FUND HIGHER EDUCATION, AND I DO THINK THAT THERE ARE SOME UNIQUE WAYS THAT WE CAN THINK ABOUT USING INCOME DRIVEN REPAYMENT ON THE STATE LEVEL. THERE'S A LOT OF TALK ABOUT FREE TUITION PLANS, AND THESE ARE GOOD TO GET BACK YOUR IDEA OF SHOULD THE FEDERAL GOVERNMENT MAKE A PROFIT? BUT I DO THINK THAT INCOME DRIVEN REPAYMENT IMPLEMENTED CORRECTLY ON THE STATE LEVEL COULD SHOW US A PATH WHERE THOSE WHO GET THE DEGREE AND GO ON TO GREAT SUCCESS PAY INTO THE PROGRAM, BUT THAT THE PROGRAM SUPPORTS THOSE WHO FALL ON HARD TIMES AND DOES NOT OVERBURDEN THEM WITH A DEBT THAT CANNOT BE DISCHARGED IN THINK BANKRUPTCY THAT YOU WILL CARRY WITH YOU FOR THE REST OF YOUR LIFE. SO I DO THINK THAT THE STATES HAVE AN OPPORTUNITY TO CREATE A TEMPLATE THAT COULD SHOW THE FEDERAL GOVERNMENT THE WAY TO WORK. I THINK THAT THAT WOULD BE HELPFUL. NOW JUST ONE NOTE. WE HAVE SIMPLY SEEN SOME ANALYSIS THAT SUGGESTS THAT NOT ALL STUDENT LOANS ARE NONDISCHARGEABLE IN BANKRUPTCY. THAT THERE ARE ÃTHE LOANS TO HAVE TO CONFORM TO A CERTAIN STANDARD IN ORDER TO BE NONDISCHARGEABLE. SOME OF THE LOADS OF THE STUDENTS GET, PARTICULARLY, THOSE GO ON BEYOND THE COST OF TUITION AND BOOKS AND PROVIDE MORE MONEY THAN NECESSARILY A STUDENT WOULD NEED TO PURSUE HIS OR HER EDUCATION CAN BE DISCHARGED UNDER APPROPRIATE CIRCUMSTANCES. SO I DO THINK THAT THERE NEEDS TO BE A CLARIFICATION OF WHAT WE DO IN THAT SPACE. LET'S OPEN IT UP FOR A FEW QUESTIONS, IF ANYBODY HAS ANY. ARE THERE ANY QUESTIONS? OKAY, PLEASE, GO AHEAD. EXCEL, A FEW DAYS AGO THERE WAS AN ANNOUNCEMENT ÃARE NOT AN ANNOUNCEMENT, BUT SOME NEWS STORIES ABOUT A DECISION, AS YOU SAID, A POLICY CHANGE BY THE ADMINISTRATION TO REDUCE THE TOTAL LIMIT ON STUDENT LENDING THAT IS AVAILABLE. AND IN THE NEWS STORIES ABOUT THIS, AND MENTIONED THAT THERE WAS SOME UNLIMITED BORROWING JUST WINDS UP ENCOURAGING SCHOOLS TO CHARGE MORE. AND I AM WONDERING, IF ANY OF YOU HAVE SEEN THE ÃIT DID NOT CITE ANY OF THE RESEARCH, BUT I AM WONDERING IF YOU HAVE HEARD OF THE ARGUMENT, AND WHAT YOUR TAKE IS ON IT. A YOU ARE REFERRING TO A CAP ON THE AMOUNT OF STUDENT LOANS? THAT IS CORRECT. ARE THERE COMMENTS? MY RESPONSE WOULD BE, GAINFUL EMPLOYMENT IS THERE FOR A REASON, AND THAT IF SCHOOLS OVERBURDEN STUDENTS WITH THAT THAN THEY SHOULD HAVE SOME SKIN IN THE GAME. IS THERE ANYTHING ELSE? THE NEXT QUESTION. I WAS GOING TO ASK ABOUT THE PUBLIC-SERVICE FORGIVENESS PROGRAM, SOMETHING THAT IS REALLY IMPORTANT TO ME, MY MAIN CAREER PLAN IS BUILT AROUND EXISTING AND CONTINUING TO EXIST, HOPEFULLY. I KNOW THAT THIS IS ONE LITTLE CORNER OF THE STRAND CONVERSATION BUT IT DOES SEEM THAT IF WE WANT TO ENCOURAGE PEOPLE TO CONTINUE TO FALL INTO PUBLIC-SERVICE ÃI JUST GRADUATED FROM LAW SCHOOL, I WORKED AS A LAW SCHOOL AND EVEN AS A LAWYER IT WAS THE MOST CONFUSING PROCESS ÃFAR MORE CONFUSING THAN DOING MY TAXES OR ANYTHING ELSE IS THAT DOES MY LENDER KNOW THAT I AM IN THE PROGRAM? I AM STILL NOT SURE ABOUT THAT. IT JUST SEEMS LIKE ÃTHAT IS JUST ONE PERSON. I KNOW THERE'S PLENTY OF PEOPLE WHO DEPEND ON IT FOR THEIR LAW SCHOOL AND MIDDLE SCHOOL LOANS, JUST INFINITE FOR THINGS. NOW THIS JUST SEEMS LIKE THAT IS ONE OF THE THINGS I WAS WONDERING ABOUT, AND ISSUE. THAT IS A GREAT QUESTION. THERE IS A MEMBER OF OUR TEAM WHO IS A LAWYER, HEARING HER STORIES ABOUT WHAT SHE HAS BEEN DEALING WITH, THE PERIODIC EMPLOYMENT CERTIFICATION FORMS ARE FILLED OUT, THEY ARE EYE-OPENING AS TO HOW CHALLENGING THIS IS, EVEN FOR PEOPLE WHO, LIKE YOU, ARE VERY HIGHLY EDUCATED AND THE LIKE. YOU CAN ONLY IMAGINE HOW HARD IT IS FOR THE PEOPLE WHO DON'T HAVE THAT BACKGROUND. IT'S ONE OF THE ISSUES THAT IS COME UP IN THE MASSACHUSETTS ATTORNEY GENERAL'S ACTION AGAINST LOAN SERVICING, AND IT IS REALLY AT THE CORE OF ONE OF THE LOSSES WE HAVE PENDING IN THE 11TH CIRCUIT RIGHT NOW ABOUT WHAT HAPPENED, AND WHAT IS THE RECOURSE WHEN A SERVICER ESSENTIALLY LIES TO YOU ABOUT WHETHER OR NOT YOU'RE ELIGIBLE FOR PUBLIC SERVICE? YOU CALL AND SAY AM EYE ON TRACK? THEY SAY YES, THEN TWO YEARS LATER THEY SAY ABOUT THAT, WE ACTUALLY MEANT TO KNOW. AND YOU HAVE BEEN MAKING PAYMENTS. BUT I DO THINK THAT IT IS AN INCREDIBLY TIMELY TOPIC RIGHT NOW JUST BECAUSE FOR THE FIRST CHUNKS OF PLS ASK, DO NOT FORGIVE JUST TO MAKE 120 CONSECUTIVE QUALIFYING PAYMENTS, AND PAY WHAT IS QUALIFYING AND WHAT IS NOT QUALIFYING , AND PAY WHAT IS QUALIFYING AND WHAT IS NOT QUALIFYING BUT 120 CONSECUTIVE PAYMENTS IS 10 YEARS. THE PROGRAM STARTED A LITTLE UNDER 10 YEARS GOES YOU'RE STARTING TO SEE THE FIRST SORT OF TRANSIENT PEOPLE WHO WERE ELIGIBLE TO RECEIVE LOAN FORGIVENESS COME DUE. NOW THE REALITY IS THAT I THINK THAT THE NUMBERS OR SOMETHING LIKE ONLY ONE PERCENT OF THE PEOPLE WHO THINK THAT THEY ARE ELIGIBLE HAVE ACTUALLY BEEN GRANTED RELIEF. YES.I THINK THAT THE NUMBER WILL PROBABLY TRICKLE UP OVER TIME, BUT IT IS CERTAINLY QUITE LOW AT THE MOMENT. EVEN IF IT TRIPLES, THAT WILL STILL BE | WILL HAVE TO GO UP MORE THAN THAT. THAT IS STILL PRETTY LOW. NOW GUYS, I THINK THAT WE ALL AGREE THAT THERE NEEDS TO BE A DRAMATIC REFORM OF THE PUBLIC SERVICE LOAN FORGIVENESS PROGRAM. THERE ARE TOO MANY PEOPLE WHO WE THINK THAT YOU QUALIFY FOR LOAN FORGIVENESS BECAUSE THEY ARE ENGAGED IN WHAT WE THINK IS PUBLIC-SERVICE, AND THE MOST APPROPRIATE SINCE, AND YET, THEY ARE EXCLUDED. I DON'T THINK ANYBODY WOULD TAKE ISSUE, OR AT LEAST I WOULD HOPE NOT, WITH FIRST RESPONDERS, POLICE, FIRE PEOPLES, TEACHERS, THE KINDS OF THINGS, BUT THERE ARE RESEARCHERS ENGAGED IN CANCER RESEARCH, PEOPLE WHO ARE ENGAGED IN MEDICAL RESEARCH, ALL OF THAT SHOULD BE A PART OF THE LARGER SET OF REFORMS. WHAT IS MISSING IS A SENSE OF OBLIGATION TO MAKE THOSE CHANGES. THE DEPARTMENT KNOWS THAT THE PROBLEM EXISTS, AND IT TOTALLY IGNORES IT. IT TOTALLY IGNORES IT. SO THIS IS SUCH AN IMPORTANT TIME TO PURSUE MEANINGFUL REFORMS. THEY HAVE TO BE CALIBRATED TO THE PEOPLE WHO HAVE A POWER TO DO IT. AS I WAS SETTING UP AN INSTRUCTION LIKE THIS, WHICH I AM INVOLVED IN, I WOULD LIKE TO THINK THAT WE WOULD LOOK TO THE PEOPLE IN TENNESSEE, TO TALK TO LAMAR ALEXANDER AND REALLY, GET SOME FIRST-RATE EXAMPLES OF WHAT WE CONSIDER THE PUBLIC-SERVICE WORK THAT IS NOT BEING RECOGNIZED.WE WOULD FOCUS ON PATTIE MURRAY IN WASHINGTON STATE, OTHERS WERE TRYING TO CONNECT THESE STORIES OF INDIVIDUALS TO THE ACTUAL MEMBERS OF CONGRESS WHO SIT ON THE SUBCOMMITTEES, AND I AM LOOKING AT STATES WHO ARE REPRESENTED BY REPUBLICANS, EXCLUSIVELY IN THE SENATE. NOT BECAUSE WE FOCUS EXCLUSIVELY ON REPUBLICANS, BUT I THINK IT IS FAIR TO SAY THAT WE NEED THE REPUBLICANS FOLKS TO MAKE A DIFFERENCE, GUYS.TO MAKE A DIFFERENCE. WE DO HAVE TO BE VERY STRATEGIC ABOUT THIS AND THINK OUR WAY THROUGH THE BETTER WAYS TO MAKE AN AFFIRMATIVE CASE FOR CHANGE, THEN PRESENTED THE CHANGE BACKED UP BY A LEVEL OF GRASSROOTS AND GRASS TOP SUPPORT THAT IS MISSING FROM THIS DEBATE. ARE THERE ANY OTHER QUESTIONS? YES, MA'AM? I THINK THAT THERE IS A YOUNG LADY RIGHT BEHIND YOU, TOO? WE HAVE TIME FOR A COUPLE MORE, SO WE WILL TAKE ONE FROM HER IN THEM ONE FROM YOU OVER HERE. THANK YOU. MY QUESTION IS ABOUT CONSUMER CHOICE REGARDING LOAN SERVICERS. FOR EXAMPLE YOU SAID THAT THERE ARE PENDING LAWSUITS AGAINST NAVIANT, WHO SERVICE ALL OF MY LOANS. SO IS NOT CLEAR IF THEY HAVE AN OPTION TO SWITCH TO A DIFFERENT SERVICER, OR ARE WE JUST STUCK WITH WHATEVER WE GET? YEAH, I MEAN, NO. [LAUGHTER] WITH THAT BEING SAID, YOU KNOW, IF, FOR EXAMPLE, IF YOU WANTED TO PURSUE PUBLIC SERVICE LOAN FORGIVENESS, YOU COULD GO OUT WHAT IS CALLED A PUBLIC-SERVICE EMPLOYMENT FORM THAT WOULD AUTOMATICALLY TRANSFER YOUR LOANS FROM NAVIANT TO FED LOAN, BUT THEY'VE ALSO BEEN SUED, THE MASSACHUSETTS ATTORNEY GENERAL HAS SUED THEM FOR MS. COUNTY FORGIVENESS PAYMENTS AND OTHER TYPES OF INCOME AND RECOVERY PAYMENTS, SO I DON'T KNOW THAT I WILL QUALIFY THAT IS A CHOICE. BUT YOU KNOW, THE MISALIGNED INCENTIVES CROSSOVER THE INDUSTRY, SO I THINK THAT, YOU KNOW, CHOICE IS SOMETHING THAT COULD MAKE A CHANGE BUT IT IS NOT CURRENTLY AVAILABLE. Man: PROFESSOR HENDERSON, IT HAS BEEN FASCINATING TO HEAR YOU THINKING OUT LOUD ABOUT HOW TO PUT A TOGETHER A COALITION ABOUT THIS. THIS IS NOT A SUBJECT THAT I KNOW ANYTHING ABOUT SO I WILL BE ASKING SOME QUESTIONS INITIALLY. YOU HAVE ANY DATA ON THE PERCENTAGE OF STUDENT LOANS THAT ARE HELD PRIVATELY, EITHER DIRECTLY OR THROUGH SECURITIZATION, AND HOW THAT RELATES TO A $1.5 TRILLION FIGURE? ONE OF THE THINGS THAT WE TALKED ABOUT IN THIS FINANCIAL CRISIS ALONG WITH THE MISALIGNED INCENTIVES IN THIS INDUSTRY WAS AN INABILITY OF REGULATORS TO RECEIVE HOW THE DAMAGE THAT WAS BEING DONE THROUGH THE MORTGAGE SECTOR COULD POSSIBLY BE TRANSLATED INTO THE LARGER FINANCIAL SYSTEM, WHICH UNFORTUNATELY, WE HAVE ALL LEARNED. SO I AM WONDERING, IS THERE ANY PART OF THE FINANCIAL SYSTEM THAT SHOULD HAVE AN INTEREST IN PARTICIPATING IN THE THING THAT YOU ARE TALKING ABOUT? IT IS A GREAT QUESTION. A GREAT QUESTION. I DON'T HAVE THE DATA AND I POSE THE QUESTION TO MY COLLEAGUES TO SEE IF THEY DO, BUT REGARDLESS OF HOW THEY RESPOND, WE SHOULD HAVE THE DATA. AND WE SHOULD BE ABLE TO IF WE DON'T HAVE IT CURRENTLY, THAT HAS TO BE ONE OF THE RESEARCH TOPICS THAT WE PURSUE IN TRYING TO PUT TOGETHER THE AFFIRMATIVE CASE OF CHANGE. NOW THERE ARE INSTITUTIONS, AND I THINK THAT THEY WILL BE VERY CONCERNED. WE ARE RINGING THE ALARM IF YOU WILL ABOUT THE PROBLEMS OF STUDENT LOANS. I THINK THE MAJOR BANKS SO THEY MIGHT NOT BE INVOLVED DIRECTLY, WE SHOULD BE ABLE TO PETITION A FEDERAL RESERVE TO TAKE A LOOK AT THIS, SO IT IS A GREAT QUESTION. AND IF ANYBODY HAS THAT KIND OF DATA INDICATING THE DEGREE OF LOANS, PRIVATE LOANS VERSUS THE STAFF GUARDING GOVERNMENT ISSUED? DO WE HAVE THOSE STATS. I DON'T HAVE THE DATA, SO INTERRUPT ME, BUT WHAT I THINK IS INTERESTING ABOUT YOUR QUESTION MORE BROADLY IS THAT IT REMINDS ME OF A POINT THAT COMMISSIONER CHOPRA MADE EARLIER ABOUT AUTO LOANS. WHAT HE SAID IS THAT THERE WON'T BE SOME KIND OF CATACLYSMIC EVENT LIKE THERE WAS IN TOO THOUSAND 8 WHERE THE AUTO LOAN BUBBLE COLLAPSES, BANGS COLLAPSED, AND WE NEED AGGRESSIVE INTERVENTION BY THE FEDERAL GOVERNMENT. WE WON'T HAVE THAT IN STUDENT LOANS EITHER. IT DOES NOT PRESENT THE ACUTE RISKS TO THE ECONOMY THAT YOU SAW WITH MORTGAGE LENDING. WHAT IT PRESENTS INSTEAD IS SORT OF ÃWHAT YOU ALLUDED TO EARLIER WAS A SLOW REALIZATION ACROSS THE ECONOMY THAT THE PEOPLE WHO WENT TO SCHOOL ARE NOT ABLE TO BUY HOMES OR GET CARS AND ARE STUCK IN JOBS MAY BE THAT ARE NOT SUFFICIENT TO REPAY THEIR LOANS. SO INSTEAD OF A SLOW-MOTION PAIN FOR THE ECONOMY AND SO THE CATACLYSMIC EVENTS THAT I THINK WOULD TRIGGER THE REFORMS THAT WE SAW IN THE MORTGAGE INDUSTRY. ONE QUICK POINT THAT I WANT TO ADD TO THAT, THERE IS A PROBLEM WITH THE LACK OF DATA. THE DEPARTMENT HOLDS A LOT OF THE DATA ON STUDENT LENDING, THEY DON'T SHARE IT AND THEY DON'T MAKE IT AVAILABLE BUT ARE NOW ACTIVELY USING THE PRIVACY ACT TO TRY TO BLOCK MOST SAFE BANKING COMPANIES FROM ACCESSING THE DATA, AND SO I THINK JUST GETTING THE INFORMATION WOULD BE A GOOD STARTING POINT FOR THE ANSWER. COUNCILMEMBER? WOULD LIKE TO FOLLOW UP ON THE LAST COMMENTS, AND BRING THIS BACK TO WHERE YOU STARTED, ON THE WHOLE PRESENTATION, WADE. THAT IS THAT WE ARE ALREADY WELL INTO THAT CATACLYSMIC EVENT FOR THE BLACK COMMUNITIES AND STUDENTS WITH DEBT. THE NUMBERS THAT YOU SHARED THEIR, FIRST OF ALL, A FIFTH BLACK GRADUATE SUCCESS STORIES ARE CURRENTLY IN DEFAULT. AGAIN, THE DEFAULT NUMBERS ARE WHAT ARE ALLUDED TO HERE. DEFAULT MEANS REALLY A SEVERE LEVEL OF FINANCIAL DISTRESS. SO FIRST OF ALL, JUST THE NUMERATOR AND THE DENOMINATOR, IF YOU ARE IN DEFERRAL WHICH MEANS THAT THE INTEREST IS RUNNING BUT YOU'RE NOT MAKING PAYMENTS OR INCLUDED IN THE DEFAULT CALCULATION, THEN TO HIT DEFAULT, YOU ARE NOT DEEMED IN DEFAULT UNTIL YOUR 270 DAYS LATE, 9 MONTHS IN THE STUDENT LOAN WORLD. SO YOU ARE TALKING ABOUT PEOPLE FACING CATACLYSMIC THINGS LIKE GARNISHMENT OF WAGES AND OTHER PRESSURES, AND THEN YOU LOOK AT THE OTHER DATA, THE MAJORITY OF BLACK STUDENTS ARE MAKING NO PROGRESS ON PAYING OFF THE DEBT. SO EVEN IF YOU'RE TECHNICALLY MAKING PAYMENTS, YOU OWE MORE THAN WHAT YOU STARTED WITH WHEN YOU CAME OUT OF SCHOOL, AND IT IS STILL GROWING. NOT ONLY IS THERE NO STATUTE OF LIMITATIONS ON COLLECTING THIS DEBTS, BUT ALSO THE INTEREST ACCRUING. NOW THE STUDY THAT I CITED FROM A FAIRLY SAFE RESEARCH INSTITUTION, THE BROOKINGS INSTITUTE, THEIR PROJECTION IS THAT BLACK STUDENTS WITH DEBT WHICH IS CLOSE TO 80 PERCENT OF STUDENTS, 70 , 70 PERCENT, 7-0 PERCENT, WILL DEFAULT. AND ON TOP OF ALL OF THAT, CONNECTED WITH THIS EVENT IS THAT WE SEE THIS AS A LENDING INSTITUTION. THAT IS THE NUMBER ONE REASON THAT ARE BLACK APPLICANTS DO NOT RECEIVE MORTGAGES. EVEN SOME OF THESE PROGRAMS IF YOU ARE IN THE INDIVIDUAL REPAYMENT PLAN, FOR 25 YEARS IF YOU DON'T FALL UNDER WONDER ONE OF THE OTHER CIRCUMSTANCES, FOR MANY YOU ARE EXCLUDED FROM THE PARTICIPATION IN THE MAINSTREAM FINANCIAL SYSTEM BY BEING ABLE TO BUY A HOUSE. YOUR KIDS WILL FINISH SCHOOL HOPEFULLY BEFORE YOU ARE ABLE TO EVEN APPLY TO BUY A HOUSE, SEE HOW THE COMBINATION OF STUDENT LOAN DEBT PAIRED WITH AND FEEDING TOGETHER WITH BLACK HOME OWNERSHIP WHICH IS STUCK IN THE DITCH, AT THE RATE THAT WAS FROM THE FAIR HOUSING ACT THAT HAVE BEEN PASSED AT A GREATER GAP BETWEEN BLACK AND WHITE HOMEOWNERSHIP EVEN THEN THERE WAS WHEN THE FAIR HOUSING ACT WAS PASSED 50 YEARS AGO. SO ONE OF THE THINGS THAT WE STRUGGLE WITH, THIS IS OUR MAIN FOCUS, HOW DO WE LIFT THIS UP? THESE PROBLEMS ARE RELATED TO BUT AT A DIFFERENT LEVEL, AND, IN WAYS, DIFFERENT IN KIND THAN OTHERS. SO OFTEN, WE SEE THAT THE BLACK STUDENTS WILL GO TWO FOR-PROFIT COLLEGES WITH ABOUT A 90 PERCENT ADVERSE OUTCOME FOR THAT GROUP. SO YOU START OUT WITH THAT SEGMENT, A LOT OF THEIR ASSIGNED BLACK STUDENT LOAN BORROWERS WHO HAVE RELATIVELY SMALL AMOUNTS OF STUDENT DEBT, $5-$10,000 BUT NO INCREASE IN THEIR EARNING CAPACITY. THEY WERE LIVING PAYCHECK TO PAYCHECK BEFORE THE UNDERCOOKED PROGRAM AND TOOK ON THE DEBT. SO THE FACT THAT THIS IS A SMALL AMOUNT OF DEBT MAKES, IN A LOT OF WAYS, NO LESS OF A FINANCIAL ALBATROSS ON THEM. SO I THINK THAT WE NEED TO BOTH LIFT UP THIS ISSUE AND FOCUS ON THE BLACK STUDENT BORROWERS, BUT ALSO LOOK AT THE THINGS THAT HELPS THEM THE MOST. YOU KNOW? REFINANCING AT TODAY'S INTEREST RATE IS NOT GOING TO BE THE PRIMARILY GREAT THING TO DO BUT IT WILL COST A TON OF MONEY AND WILL NOT REALLY HELP THESE BLACK STUDENT BORROWERS FOR EXAMPLE. SO WE HAVE ONE GROUP, WE NEED TO TRIAGE THIS IN SOME SENSE. WE DO HAVE ONE GROUP THAT IS REALLY BEING HAMMERED BY THIS. AND I WORRY THAT AS WE LOOK FOR THE GLOBAL SOLUTION, THOSE FOLKS ARE GOING TO DIE IN THE WAITING ROOM. WELL, THAT IS A VERY SOBERING FINAL COMMENT FOR THE AFTERNOON, GUYS. AND OBVIOUSLY, WE HAVE JUST SCRATCHED THE SURFACE OF WHAT IS A REALLY IMPORTANT NATIONAL DEBATE, A CRISIS HIDDEN IN PLAIN SIGHT THAT IS AFFECTING MORE AND MORE AMERICANS ACROSS THE RACIAL LINES, BUT CERTAINLY WITH A DISPROPORTIONATE EFFECT ON THE AFRICAN AMERICANS AND COMMUNITIES OF COLOR. BUT AGAIN, I DO THINK THAT THIS IS HAVING SUCH A BROAD IMPACT, THIS SOLUTION IS IN REACH, THIS IS AN ORGANIZING CHALLENGE AS WELL AS A SUBSTANTIVE ARGUMENT CHALLENGE. WE HAVE TO THINK OF HOW WE ORGANIZE OURSELVES, AND THOSE WHO WILL SHARE OUR VIEW MORE EFFECTIVELY TO IMPACT THE POLICYMAKERS IN WASHINGTON AS THE OPPORTUNITY PRESENTS ITSELF. THIS REAUTHORIZATION OF THE HIGHER ED ACT IS A GOOD THING. THE INITIATIVES TAKING PLACE IN THE STATE ARE GOOD THINGS. THESE ARE THE LABORATORIES OF CHANGE. GETTING THESE IDEAS FROM THE ATTORNEYS GENERAL WHO HAVE WORKED COLLECTIVELY TOGETHER ON A NUMBER OF ISSUES WHO MIGHT BE ABLE TO SHINE A LIGHT HERE, THINKING THROUGH HOW WE CAN BRING POLITICAL PRESSURE THEREFORE THROUGH GRASS TOP ORGANIZATIONS, TO HAVE AN INTEREST IN THESE ISSUES BUT DON'T NECESSARILY SEE THEMSELVES AS BEING ACTIVE PLAYERS.WE ARE GOING TO HALF TO BRING THE MEN FROM THE SIDELINES, TO RECRUIT THEM TO BE ENGAGED IN THIS. SO WITH THAT, I WILL BRING THIS PANEL TO THE CONCLUSION. THANK ÃPLEASE HELP ME IN THANKING THE EXTRAORDINARY SPEAKERS. [APPLAUSE] I PROMISE THAT OUR AGENDA HAS ME TALKING FOR A HALF-HOUR BUT I DO PROMISE THAT THAT IS NOT TRUE. I JUST WANT TO GIVE SOME BRIEF AND CLOSING REMARKS. WHAT A TERRIFIC PANEL WE JUST HAD. IT IN THE LAST TWO DAYS HAS LEFT ME AND IS SPIRIT THAT I WAS NOT INTENDING WHEN I ORGANIZE THIS CONFERENCE WHICH IS JUST UNBELIEVABLY ANGRY. [LAUGHTER] AND I AM HOPEFUL THAT OUR