By Bryan O'Keefe
Time for another update on the student loan scandal. Now that the scandal is blowing up into quite possibly one of the biggest embarrassments for higher education in quite some time, the media is starting to point fingers at who is to blame – the colleges, the lenders, the Department of Education, all three?
The Wall Street Journal seems to shift the focus today onto the latter of that trinity, with a story detailing numerous connections between Department of Ed folks and the student loan industry. The story seems to imply that because some people from the Ed Department either previously or eventually worked for a private lender, there was relaxed oversight. Despite this insinuation, I didn’t think a lot of the specific examples were too damning. Yes, some people who used to work at the Department of Education received jobs at private student lenders after they left government service. Just as some people who used to work at the Department of Defense go and work for defense contractors, and so on and so forth. This same game of musical chairs between government service and the private sector happens literally every day in the nation’s capital (apologies in advance if I am ruining an idealistic notion of Washington that some readers might have). It’s entirely possible that maybe something more sinister was going on, but we need much stronger evidence to conclude the worst case scenarios.
I think that the broader problem – and the real way to avoid more scandals of this type – is what Rich wrote about earlier this week – decoupling the connection between higher education itself and its funding. There is an embedded connection between the two and until that is changed, it will be impossible to really get to the heart of the issue.
Unfortunately, very little that I have read so far touches on this. We are becoming consumed now with trying to “blame” somebody and while there is probably some role for that, we also need to start looking forward and figuring out how to fundamentally change the way that things are done. Perhaps, in an ironic way, this scandal even opens the doors to other private sector companies that might have a fresh perspective on how to both provide loans to students and avoid ethical problems between universities and the lenders themselves. Out of this rubble, maybe a new model can emerge.
The more likely result however is that there will be a renewed call for more government regulation and greater private sector “oversight” from agencies like the Department of Education. This will not accomplish anything substantial. I suppose that's the status quo in Washington, DC.