WASHINGTON — James Runcie’s resignation as chief operating officer of the Office of Federal Student Aid was the subject of heated discussion at a House Oversight and Government Reform Committee meeting on Thursday.
Runcie abruptly resigned as COO on Tuesday night, a position he had held for the past seven years. In an email sent to his staff on Tuesday, obtained by the Washington Post, Runcie said his resignation was precipitated by Education Secretary Betsy DeVos’ request that he testify before Congress on Thursday regarding improper payments in student aid.
Runcie said in the email that Jay Hurt, chief financial officer at FSA, was prepared to testify in his stead and that he had not “heard a single compelling reason” from DeVos’ staff regarding why he should attend the hearing.
The hearing in question related to improper payments made in FSA’s Direct Loans and Pell grant programs. FSA manages a portfolio of student loans that now totals nearly $1.3 trillion and distributes approximately $125 billion in student aid annually.
According to the Department’s Office of Inspector General, revised estimates indicate that improper payments made in the Direct Loan program increased from $1.28 billion in 2015 to $3.86 billion in 2016. With regards to Pell, improper payments went from $562 million to $2.21 billion during the same period.
An improper payment, according to department terminology, is any student aid payment that should not have been made, was too high or too low, or was made in error. Some payments are the result of fraudulent activity, either by individuals misrepresenting themselves or by fraud rings.
A major source of improper payments, however, come from “unverified, self-reported financial data provided by aid applicants,” according to Justin Draeger, president of the National Association of Student Aid Administrators (NASFAA), who testified on Thursday.
