On May 24, 2017, the head of the Federal Office of Student Aid (FSA), James Runcie, handed in his resignation. Runcie blamed his sudden departure on overreach from Betsy DeVos and the Department of Education.
“I am incredibly concerned about significant constraints being placed on our ability to allocate and prioritize resources, make decisions and deliver on the organization’s mission,” Runcie wrote in an email to this staff obtained by the Washington Post. “[I am] encumbered from exercising my authorities to properly lead this great organization.”
But Department of Education spokeswoman Liz Hill said Runcie was avoiding testifying in front of Congress. “The Secretary directed Mr. Runcie … to answer questions regarding oversight within FSA and repeated issues concerning improper payments,” Hill said in a statement. “He chose to resign rather than face Congress.”
Interpretation of Runcie’s resignation has largely split along partisan lines. Some Democrats want an investigation into interference in the FSA. But Republicans suggest Runcie mismanaged the federal student aid system.
James Runcie’s resignation comes after the new education budget proposal
Runcie’s resignation comes a week after the White House released its education budget proposal. The proposal called for cuts to Pell grants, work-study programs, interest subsidies, and Public Service Loan Forgiveness. It also sought to replace the four existing income-driven repayment plans with a single, new plan.
The budget proposal would slash $143 billion from the education budget over the next 10 years. The FSA currently oversees $1.4 trillion in financial aid to students, including more than $150 billion in grants, loans, and work-study funds for college students.
Don’t panic: The budget plan proposal isn’t a done deal
But borrowers shouldn’t panic. This budget plan is just a proposal right now, and Congress is likely to make significant revisions.
“Nothing is set in stone at this point,” said Jay Fleischman, student loan lawyer. “In the event that there are going to be any major changes to the way federal student aid is administered, repaid, or forgiven, [the plan] has to go through a process that entails far more than one person standing up and saying this is going to be so.”
At the same time, Fleischman encourages borrowers who oppose the proposal to take action. “[This is the] time to stand up and pick up the phone to call your elected representatives if you disagree,” he said.
The FSA can do more to protect students and borrowers
Consumer advocacy groups have criticized the FSA for failing to help borrowers and allowing too many people to go into default. In fact, the Consumer Financial Protection Bureau is currently suing Navient, the nation’s largest student loan servicer, for its harmful practices.
The FSA “is widely seen as a strong ally to the student loan industry,” said Rohit Chopra, a senior fellow at the Consumer Federation of America, according to Politico. “The next COO should be laser-focused on the interests of students and taxpayers.”
For now, deputy chief operating officer Matthew Sessa will take Runcie’s place. We’ll have to wait and see how the next head of the Office of Federal Student Aid plans to protect student loan borrowers amidst all these upheavals.
Know your student loan options
Federal watchdogs and borrower advocacy groups have questioned the FSA’s ability to manage major loan servicers such as Navient. And as the current lawsuit against Navient shows, borrowers can’t always rely on loan servicers to act in their best interests.
Educate yourself. When it comes to student loan repayment, you need to educate yourself about your options. Look for trusted sources with a commitment to protecting student loan borrowers.
Consider income-driven repayment. If you’re struggling to pay your bills, look into income-driven repayment plans. Deferment and forbearance can also help some borrowers who go back to school or run into major financial hardship.
Think about refinancing. Student loan refinancing is also an option for borrowers with a steady income and strong credit. And there are a variety of loan forgiveness and repayment assistance programs for borrowers around the country.
With this latest upheaval from the education department, it’s more important than ever to take action on your student loans. Learn all of your options, so you know the best path forward.
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