Student Loans and DOE S.W.A.T. Teams

On March 11, 2010, Washington Post blogger Valerie Strauss asked an intriguing question: "Why is the Education Department purchasing 27 Remington Brand Model 870 police 12-gauge shotguns?"

On June 7, 2011, the answer became clear. At 6 a.m. a S.W.A.T.-style team of 15 officers from the U.S. Department of Education’s (DOE) Office of Inspector General broke down a door in Stockton, California. (The OIG is the semi-independent law-enforcement branch of the DOE which pursues criminal offenses such as student aid fraud.) The agents had a no-knock warrant that had been issued by the DOE

On the other side of the door were Kenneth Wright and his three children ages 3, 7, and 11. None of them had violated any law.

Nevertheless, an officer grabbed the underwear-clad Wright by the neck and dragged him onto the front lawn, pinning him down with a knee in the back. Eventually, the handcuffed Kenneth and his children were placed in the back of a patrol car for six hours while the police searched his house.

Who was the heinous criminal sought? Wright’s estranged wife who was not present in the home.

What was her crime? At first, the local News 10 (KXTV) reported that she had defaulted on a student loan but, later, the story was taken down and replaced by one stating instead that the raid “was part of an ongoing criminal investigation.” Wright insists that the agents told him they were there over a loan default. The DOE refuses further comment.

The most likely crime being investigated is student aid fraud, which is an immense problem especially at inner-city colleges. Because of the ease of obtaining government grants and loans, students can register for different programs under multiple names and Social Security numbers.

When the checks arrive, the applicants often walk away from the college and the debt. Indeed, student money is handed out so freely and with so few controls that a South Carolina woman was sentenced this week for filing 23 fraudulent applications and spending more than $120,000 in student aid; she accomplished the feat while doing time in a correctional facility.

Even without the massive fraud, the amount of student debt is staggering. The organization Project on Student Debt estimates “that college seniors who graduated in 2009 carried an average of $24,000 in student-loan debt, up six percent from the previous year.” Other than mortgages, student loans are now America’s single largest source of debt, surpassing even credit-card debt. Paradoxically, the student debts are both highly collectible and among the most difficult to collect: that is, the debt cannot be discharged in bankruptcy and, yet, it is not backed by a tangible asset that can be seized; unlike a house, an education cannot be repossessed.

Clearly, the DOE wants to not only be paid and but also to stanch the outflow to fraudulent claims. Whatever the specific reason for federal agents to focus on Wright’s front door, the motive was money. At every level of government — federal, state, county, municipal — agencies are becoming desperate for money, and the tactics they use to grab it or preserve it will become more draconian as the recession deepens.

At that point, it will become clear how powerful various federal agencies have become through the passage of phone-book-thick legislation that few people bothered to read.

A DOE S.W.A.T. Team?
Technically, the federal OIG agents are not a S.W.A.T. team but merely function in a manner identical to one. With the DOE and other government departments, OIG agents are part of a quiet and largely-unnoticed increase in the federal power to coerce.

The DOE resembles the Internal Revenue Service in possessing wide-reaching powers to collect unpaid money and punish abuses of the system. The agency can garnish wages, impose liens, and attach tax returns without a court order. It can issue warrants without involving a judge and execute those warrants with its own federal agents. Because it is a closed and non-transparent system, those victimized by the DOE are usually left with no recourse. In the case of Kenneth Wright, for example, local police accompanied the team and, so, gave the appearance of cooperation although they did not participate in the assault. When Wright went to the police department and the mayor to ask for a new door, however, he was told that the operation had nothing to with them.

The DOE’s flexing of power comes in the wake of an extreme expansion of its authority. The Health Care and Education Reconciliation Act of 2010 essentially nationalized the process of granting and administering student loans, so that the DOE provides such loans directly rather than reimbursing banks. In short, the government no longer backs student loans in the private sector. (The provisions are slated to go into full effect in 2014.) Critics point out that the DOE’s monopoly on government-backed loans gives it an unprecedented power to determine who receives assistance, which careers are encouraged, and the curriculum offered by colleges.

The monopolization of student loans is also a money grab. In the DOE’s Direct Loan program, students may borrow $20,500 a year at an annual interest rate of 6.8 percent. Since the funds lent out are acquired at an interest rate of slightly under 3 percent, the profit margin is considerable, as is the motivation to collect. Indeed, those promoting the Health Care and Education Act explicitly pointed to student loans as a means of partially financing the bill. Under the circumstances, the DOE is not likely to be reined in.

As with the Transportation Security Administration, any excesses that seem to violate constitutional rights will be justified in the name of “administrative policy”; that is, by an appeal to authority of administrative agencies to make internal policies that permit the implementation of law or other mandates. These policies can be overruled only by the executive (i.e., President Obama), whose will the DOE is executing, and by the judiciary, which generally remains on the side lines.

In commenting on the June 7 S.W.A.T. assault, called the action “a wake-up call about the militarization of police and criminalization of everything.”

The raid also unmasked the full extent to which federal administrative agencies, like the DOE, have swollen in power, function, and arrogance. Does the OIG attached to the Department of Energy also issue no-knock warrants at its own discretion? The Department of Health and Human Services has one of the largest OIGs; have they ordered armored vehicles as well heavy weaponry? Does the post office have a S.W.A.T. team?

I don’t know … and neither do you. The true wake-up call of July 7 was how unexpectedly powerful and violent the innocuous-sounding Department of Education has become. I expect that none of us will know the true collective power of the federal government until it is breaking through our own doors.


Leave a Reply

Be the First to Comment!

Notify of