Consumer Protection in an Age of Uncertainty Panel 5: Student Loans Address (Day 2) | Gerald R. Ford School of Public Policy

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

March 22, 2019 1:47:04
Kaltura Video

What is the status of consumer protections in place for student borrowers and efforts to regulate loan servicers, debt collectors and for-profit colleges? Learn more about the conference here. 

Transcript:

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