Consumer Protection in an Age of Uncertainty Panel 5: Student Loans Address (Day 2)

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