Consider the Trump administration’s recent plan to fire at least 300 staffers from the Department of Education. Insiders are up in arms, sounding the alarm that this change will cause unprecedented fraud and abuse of the student loan program. Though the dismissals went into effect just last week, the impacts are already apparent. As was the case recently with the Free Application for Federal Student Aid (Fafsa) website, which suffered an hours-long outage. Education Secretary Linda McMahon promises us that these cuts will drive greater efficiency. On the other hand, critics claim that the department’s layoffs threaten its capacity to adequately oversee its $1.6 trillion student loan portfolio.
The AFT American Federation of Teachers has already done it. They filed a class-action lawsuit against the Department of Education, challenging the Department’s suspension of applications and reviews for all income-driven repayment plans. Whether this legal action will actually succeed or not, its repercussions could be millions of borrowers, thereby drastically altering the student financial aid landscape. Skepticism remains deep in the department. Some are skeptical of the administration’s pledge not to touch any of the statutory programs—at least not without notice.
Thomas McWhorter, former dean of student financial services at Northeastern University, told them that he found the cuts “incredible.” He cautioned that these cuts would kill important oversight and compliance mechanisms that are essential to that system.
“This is hard for anyone to believe. It means oversight is gone, and approvals may never happen or there is no enforced compliance of statutory regulations,” said McWhorter.
And the Series has taken a particularly heavy toll on the School Eligibility and Oversight Group with these dismissals. This essential unit oversees all recertifications, initial applications, updates, ownership changes, programmatic reviews, cash monitoring and more. As one recently terminated Federal Student Aid staffer emphasized the issue, colleges and universities are left in a very tough position without this assistance.
“We were already severely understaffed. Without our office, these schools are stuck in limbo,” remarked the former employee.
A senior official who withstood the axe articulated dire warnings about the lack of quality measures built into the system.
“They got rid of all of the quality checkers. It’s only a matter of time [before] they cause the whole system to fail,” warned the official.
The Institute for College Access and Success has shared their disappointment. They feel just as bad about the effects of having to make such deep cuts in personnel. A statement from a Department of Education spokesman tried to tamp down fear among worried stakeholders.
“The department will deliver high-quality customer service to borrowers,” assured the spokesperson.
This reassurance isn’t very comforting at a time of rising alarm. The dangerous and misguided workforce reduction raises grave concerns about how it will harm the oversight of the federal financial aid.
Student loan advocates, for their part, are rightly horrified by this news. What we’re hearing from federal employees is that the student loan system would be put in jeopardy without appropriate staffing levels and quality assurance processes. Reassigning or terminating principal field offices frequently leaves gaps in oversight. This would open the door to rampant new discrimination in thousands of public school districts around the nation.
“What Linda McMahon has done is given 5,000 institutions the green light to cause massive amounts of taxpayer fraud and abuse of federal financial aid dollars financed by taxpayers without any check and balances in place,” warned a recently terminated employee.