Secretary of Education Betsy DeVos Announces Intent to Appoint Dr. A. Wayne Johnson as Chief Operating Officer of Federal Student Aid

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Post By: The Hill
http://thehill.com/homenews/news/338737-devos-picks-ceo-of-for-profit-le...

Education Secretary Betsy DeVos's pick to lead the department's $1.3 trillion student loan system is the CEO of a private student loan company.

A. Wayne Johnson, who was tapped as chief operating officer of Federal Student Aid (FSA), is the founder and chief executive of Reunion Financial Services, a company that originates and refinances student loans.

That credential is notably absent from the Education Department's release on Tuesday announcing Johnson's appointment.

Johnson will be appointed to take the place of James Runcie, who abruptly resigned last month over a dispute with DeVos.

Just before he stepped down, the former student aid COO refused to testify before the House Oversight Committee about the agency's rising levels of improper payments for federal student aid programs.

"I cannot in good conscience continue to be accountable as Chief Operating Officer given the risk associated with the current environment at the Department," Runcie wrote in a memo obtained by BuzzFeed News.

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Post By: insideArm
https://www.insidearm.com/news/00043031-secretary-education-betsy-devos-...

The Department of Education (ED) issued a press release that has garnered little national attention, yet may be very significant for the ARM industry.

Per the press release:

“Today, U.S. Secretary of Education Betsy DeVos announced her intent to appoint Dr. A. Wayne Johnson as Chief Operating Officer of Federal Student Aid (FSA). Dr. Johnson is a highly regarded leader with more than 30 years of experience in the financial services industry and holds a Ph.D. in higher education leadership.

"Wayne is the right person to modernize FSA for the 21st Century,” said Secretary DeVos. “He actually wrote the book on student loan debt and will bring a unique combination of CEO-level operating skills and an in-depth understanding of the needs and issues associated with student loan borrowers and their families. He will be a tremendous asset to the Department as we move forward with a focus on how best to serve students and protect taxpayers."

Johnson has previously held executive positions at VISA USA, Providian Financial, and First Data Corporation. Most recently, Johnson was also Founder, Chairman, and former CEO at First Performance Corporation and CEO of Reunion Financial Services Corporation / Reunion Student Loan Finance Corporation. In those prior positions Johnson has been involved in high volume, large scale operations that required a focus on technology, compliance, and customer service.

The federal student loan portfolio now approaches $1.4 trillion. Technology issues are rampant. Student borrowers constantly complain about fragmented information and multiple servicers of different loans for the same consumer that do not communicate. Customer service for these students needs to be improved – and improved dramatically. Compliance with regulations governing the industry should be a core part of the DNA of FSA.

“There is more federal protection in place when you buy a car than there is when you sign up to take on student debt. It comes down to basic consumer protection.”

Among the critical issues that Johnson will need to deal with in the coming months are:

• Allegations that FSA has been mismanaged in the past. See this May 25, NPR story (http://www.npr.org/sections/ed/2017/05/25/529560167/why-did-the-top-stud...).
• A prior ED proposal to move to a single source model for servicing the massive ED portfolio. See this May 22, 2017 insideARM article on the issue (https://www.insidearm.com/news/00042929-ed-proposes-single-source-model-...).
• The ED PCA RFP that has been mired in protests and litigation. See here for a link to an insideARM.com page that provides a history of our ED RFP related articles (https://www.insidearm.com/news/tag/department-of-education-collections/).