Part of Ms. Latreille’s responsibilities as the ombudsman in the Federal Office of Student Aid is to author annual reports on the state of the program.  In her 2022 report, Ms. Latreille included several racially inflammatory passages.

“At each stage of the student aid lifecycle, the higher education finance model disproportionately fails families of color,” the ombudsman’s report says. “Collectively, these failures perpetuate disparities in student and borrower outcomes and may ultimately widen the racial wealth gap. If policymakers wish to restore the promise of higher education and the pathway to the middle class for all, they should examine the student loan safety net through an equity lens and consider expanding existing programs to ensure more equitable outcomes for student loan borrowers.”

"Research shows that systemic racism in financial markets leaves families of color with less wealth to pull from to fund higher education, driving them to disproportionately rely on student loans compared to their white peers. Then, labor market inequities and disparities in servicing outcomes lead borrowers of color to disproportionately struggle during repayment. This cycle continues through generations, and many parents of color are still paying down their own student loans as they take on debt for their children’s college educations.

The student loan safety net should, in theory, offer a path to mitigate some of these disparities. For example, public service employees, who are disproportionately people of color, can have their student debt forgiven after ten years through PSLF.57 However, complaints from students and borrowers demonstrate how the safety net often fails to account for the lived reality of families of color and how they access federal aid and manage their finances. The following discussion reviews three examples in which students, borrowers, and families of color may be disproportionately burdened by their student loan debt during the financial aid lifecycle—accessing aid through college-sponsored accounts, managing loan repayment amidst Chapter 7 or Chapter 13 bankruptcy, and paying for their children’s education through Parent PLUS loans—and offers solutions to promote more equitable outcomes."

"Bankruptcy protections are disproportionately exercised by people of color, and in particular, black women—a population that already struggles unequally during student loan repayment. Bankruptcy policies therefore have outsized, if unintended, consequences for borrowers of color. For example, approximately 70% of low-income Black Chapter 13 filers do not achieve a bankruptcy discharge, as compared to 50% of low-income white filers. Not only do student loan payments made during bankruptcy not count towards student loan forgiveness, but borrowers are left with the same debt burden as when they started and even less ability to pay. This effect is particularly notable for borrowers of color, who research shows return to repayment more financially vulnerable than before filing for bankruptcy."

"As of July 2022, 3.6 million borrowers owed $106.3 billion in Parent PLUS loans owned by the Department. Parent PLUS loans are one of the more costly loan products offered by the federal student loan program—these loans have higher interest rates and origination fees than Direct subsidized and unsubsidized loans and have less flexibility in repayment. While Parent PLUS loans may have been originally intended as a way for high-asset, low-liquidity families to pay for school, research shows that the reality of who is taking out these loans is quite different. In fact, the high costs of Parent PLUS loans are disproportionately borne by families of color, who have less wealth to pull from to pay for school and therefore rely on Parent PLUS loans to bridge the gap between the cost of attendance and other federal aid offerings.

Over the last decade, the share of low-income families of color who took out Parent PLUS loans increased dramatically. As one study shows, “the share of black Parent PLUS borrowers whose families have so little wealth or income that their expected family contribution . . . is zero rose from 15% in 2008 to an astonishing 42% in 2018.” In another study, researchers found that “the adverse effects of Parent PLUS loans on borrowers with fewer economic resources are inextricably linked with racialized disparities in wealth and education.”

These higher-cost loans also lack the repayment flexibility found with other federal student loans. For example, Congress prohibited Parent PLUS loan borrowers from enrolling in an IDR plan. If parent borrowers consolidate their loans, the only IDR plan available to them is income contingent repayment, which sets payments twice as high as most other IDR plans. Complaints show that Parent PLUS borrowers are struggling to afford repayment and are subjected to the same servicing breakdowns as other borrowers.

The high costs, servicing failures, and policy exclusions have culminated inexpensive loans for families well into retirement (that is, if they can retire).The fallout for families of color is notable—according to one study, “ten years after starting repayment, the parents who received Parent PLUS loans and had children attending the top colleges for Black enrollment still owe on average 96% of their principal, compared to 47% among those whose children attended the top colleges for white enrollment.” If these parents default, they risk having their wages garnished and Social Security benefits offset—an outcome that, again, disproportionately affects borrowers of color."

Conclusion: Without additional robust interventions, the cycle of inequity in higher education finance is doomed to repeat itself generation after generation. The student loan safety net has the infrastructure to provide much-needed relief to borrowers and communities of color, but it must be expanded to effectively meet the needs of the intended beneficiaries. Until then, student debt will continue [to] drive disparities that negate the benefits of a college education."

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These statements are emblematic of the entrenchment of DEI in the federal government bureaucracy. Bonnie Latreille seeks to divide Americans by race, rather than focusing on building the best education system to serve all Americans.

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In November 2021, Ms. Latreille appeared at a conference for “Next Gen Policy,” which describes itself as “a California based non-profit organization dedicated to supporting and advocating for progressive policy, legislative, and programmatic issues in the areas of: climate, affordable housing, voting rights, healthcare, criminal justice reform, education, income inequality, mental health, consumer protection, and veteran affairs.

We fight for progressive policy change to address environmental, social, racial, and economic inequities in California through justice-centered legislative advocacy, grassroots partnerships, and democratic civic engagement.”

For a federal employee to choose to appear at this sort of a conference suggests she brings a worldview to her job that would be out of place in a conservative administration.

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Before becoming the Student Loan Ombudsman for the Department of Education, Latreille was a senior official at the Student Borrower Protection Center (SBPC), an activist group that wants the government to pay off student debt using the tax-dollars of hardworking Americans. Latreille is also close to Seth Frotman who currently is the Director of Enforcement at CFPB. Bonnie and Seth both worked at CFPB during the Trump administration and resigned in protest of President Trump’s policies on student debt and founded SBPC.

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