An outgoing Education Department official with political ambitions says debt cancellation is one way to fix a student-loan system that’s “fundamentally broken.”
A. Wayne Johnson is stepping down as the Federal Student Aid office’s chief strategy and transformation officer, and is reportedly planning a run for one of Georgia’s seats in the U.S. Senate.
Johnson is calling for debt cancellation up to $50,000 per borrower, he told the Wall Street Journal on Thursday. His plan could wipe away $925 billion of the $1.5 trillion that Americans now owe on their student loans.
Johnson is eyeing a spot that retiring Sen. Johnny Isakson, a Republican, is vacating for health reasons. He’s never run for a public office, but plans to run as a Republican in the 2020 special election, he told The Wall Street Journal.
Johnson’s not the first person to call for debt cancellation — two other high-profile proposals come from Sen. Elizabeth Warren and Sen. Bernie Sanders, both Democratic presidential candidates.
If A. Wayne Johnson can’t help push along debt cancellation, assuming wins a senate seat, experts say there are other ways he could ease borrower burdens.
Whatever the plan, federal lawmakers would have to vote for new laws enacting far-reaching student debt cancellation.
That could be a tall order, especially at a time when Capitol Hill is mired in partisan gridlock and an ongoing Democrat-led impeachment inquiry of President Donald Trump.
Furthermore, Johnson might not receive a lot of support from his own ranks. More than half of Republicans (53%) polled for a YouGov survey earlier this year opposed student-debt cancellation, while 58% of Democrats supported forgiveness regardless of a borrower’s circumstance.
If Johnson can’t help push along debt cancellation, assuming wins a senate seat, experts say there are other ways he could ease borrower burdens.
There’s a smaller-scale loan forgiveness program that’s under fire for allegedly being too restrictive, while tax credits and free college programs have been touted by lawmakers as possible solutions.
The Education Department confirmed Johnson’s resignation on Thursday, but declined to comment further. Johnson, 67, also the founder and former CEO of First Performance, a company involved in payment processing, could not be immediately reached for comment.
“It is telling that Trump administration officials not only agree that the current student-loan system is broken, they also agree that student-debt forgiveness is a large part of the solution,” Natalia Abrams, executive director of Student Debt Crisis, an advocacy group that supports debt cancellation plans and free college, said of the news of Johnson’s resignation.
Fixing one existing loan-forgiveness program
The Department of Education oversees the Public Service Loan Forgiveness program, which was created to cancel debts for certain public-sector workers, like teachers and nurses, after 10 years of qualified payments.
But 99% of applicants so far have been rejected, in part because of misdirection and unnecessary complexity, according to critics.
Earlier this month, Senate Democrats sent Johnson’s ex-boss, Education Secretary Betsy DeVos, a letter decrying the Trump administration’s “flawed implementation of loan-forgiveness programs.” Education Department officials have said they are carefully carrying out an intricate program.
Johnson’s home state of Georgia already offers several programs where doctors, dentists and other medical professionals can have portions of their school loans repaid in exchange for working in rural, under-served areas. It has, however, proven to be a complex and, sometimes, fraught process.
Georgia households owed $7,250 in student debt per capita at the end of 2018, according to the Federal Reserve Bank of New York. The average American household owed $5,390 in student debt per capita last year, the data showed.
Expanding tax credits and incentives
There are two federal tax credits geared towards people pursuing their college degree, or career advancement. One credit, the American Opportunity Credit, allows a claim of up to $2,500 for the first four years of school work. The second, the Lifetime Learning Credit, allows claims up to $2,000.
Johnson could push to expand those, or he could ask Georgia state lawmakers to look at examples of good practice in other states and cities. Some states will help with student loans if students agree to live and work there after they’ve graduated. For example, Maine has a tax-credit program that allows eligible people subtract their student-loan payments from the state income taxes they would owe.
Kansas also has a loan-repayment program that applies to qualifying doctors, dentists, nurse practitioners and counselors who practice in areas with too few health-care professionals. However, the program is “very competitive” and has “limited funds,” the state notes.
Making college free
Rising school costs are making it increasingly difficult for students to keep a lid on escalating student loans. Still, at least 20 states have some sort of free college program in place so students don’t graduate from a public school with big debts over their head. Last month, New Mexico became the latest state to unveil a plan.
Another 150 cities, counties and school districts have some type of free college program in place where they’ll pay for a student’s schooling.
Senators Warren and Sanders are both proposing federal plans to make public college free as well.
But in Georgia, Johnson could call on state lawmakers to expand a free college program already in existence. Georgia “has one of the best known statewide merit-based scholarship programs,” according to Michelle Miller-Adams, a senior researcher at the W.E. Upjohn Institute for Employment Research, which is based in Kalamazoo, Mich. and studies labor markets and questions like the cause of joblessness.
Miller said the 26-year-old program pays for the in-state tuition of students who have at least 3.0 cumulative grade-point average. Unlike Georgia, the current wave of free college programs “do not have academic merit requirements to qualify,” she noted.
Such issues may pose a challenge for A. Wayne Johnson and others who attempt to follow in his footsteps.
But, as The Wall Street Journal noted, Johnson said that it’s important to take action to address what he regards as a student-loan crisis sooner rather than later.
College graduates, Johnson said, grapple with student debt for decades: “The time has come for us to end and stop the insanity.”