Senators Express Concern Over Conflicts of Interest for Top ED Official

By Allie Bidwell, NASFAA Senior Reporter

A group of Democratic senators last week wrote to the Department of Education's (ED) ethics official, expressing concern over the expanding role of James Manning, one of ED's top officials who now serves as both acting under secretary of education and acting chief operating officer of Federal Student Aid (FSA).

The senators—Elizabeth Warren of Massachusetts, Dick Durbin of Illinois, Kamala Harris of California, and Catherine Cortez Masto of Nevada—wrote to Marcella Goodridge-Keiller, the designated ethics official at ED, asking how the agency has "addressed potentially significant conflicts of interest that appear to exist" in Manning's current roles.

Manning has served as the acting under secretary of education since April, and took on the additional leadership position at FSA in January, when Education Secretary Betsy DeVos announced that then-chief operating officer, A. Wayne Johnson, would transition into a new role focused on strategy and transformation.

The senators wrote in their letter that because of Manning's standing within the federal government as a member of the senior executive service, he was not required to sign the ethics pledge President Donald Trump issued through an executive order shortly after being inaugurated. The senators took particular issue with Manning's connection to William Hanson, who was president and CEO of USA Funds before it transferred its federal student loan portfolio to Great Lakes Higher Education Corporation in December 2016 and was renamed as Strada Education Network. Hansen still leads Strada, and sits on the board of Performant Financial Corporation, which was awarded a new debt collection contract by ED in January 2018. The letter also notes that Manning served as chief of staff for Hansen while he served as deputy secretary at ED from 2001 to 2003.

"The Under Secretary of Education is generally involved in policy matters impacting higher education and, as Acting Under Secretary, it is likely that Mr. Manning has been involved in policy efforts that could have impacts on companies that Strada and one of its private equity partners … are invested in or may invest in," the senators wrote.

The senators submitted a list of questions related to Manning's role at ED, including whether his dual appointment would violate the intent that FSA operates as a performance-based organization with "independent control of its budget allocations and expenditures, personnel decisions and processes, procurements, and other administrative and management functions."

The senators also questioned whether Manning had consulted with the agency's ethics official regarding "limitations on his participation" with issues related to Strada Education Network and their partners, whether the ethics official does or did have "a formal or informal written agreement" with Manning regarding recusals, and whether Manning participated in discussions that led up to ED's March 2017 decision to roll back a rule related to loan guaranty agencies' collection fees on student loans. In response to that decision, Great Lakes clarified that it would not change its collection fee policy, and would continue with its practice of not collecting fees on borrowers who rehabilitate their loans within 60 days of default.

The senators asked that ED respond to the inquiry by April 13, 2018.


Publication Date: 3/28/2018

Michelle C | 3/30/2018 5:36:39 PM

You have got to be kidding me - guess I've been under a rock because I didn't know Manning had such deep conflicts of interest. The sad thing is I expect nothing will come of this very real conflict of interest - I feel sorry for the actual caring folks who work at the Dept of Ed trying to stay out of this storm and fellow aid professionals who believe integrity is more than a noun.

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