By Lisa Lambert
WASHINGTON (Reuters) - Education Secretary Betsy DeVos on Tuesday tapped a former credit card and prepaid-card executive to lead the U.S. government's $1.4 trillion student loan program, replacing the chief operating officer who resigned last month.
DeVos said her choice, A. Wayne Johnson, "will bring a unique combination of CEO-level operating skills and an in-depth understanding of the needs and issues associated with student loan borrowers and their families."
The financial aid sector gave the announcement a careful reception, with the National Association of Student Financial Aid Administrators, or NASFAA, saying it looked forward to learning more about Johnson's views. Critics blasted Johnson's corporate past.
The student loan program touches the lives of 42 million borrowers. According to NASFAA, its size would put it in fifth place on the Federal Reserve's list of the largest U.S. holding companies, just behind Citigroup. That makes it a top issue across the country.
In last year's election, Donald Trump and other Republicans campaigned on "getting government out of the business of student loans." Democrats want to stay on the path forged by former President Barack Obama, who moved student lending from the banks to the federal government.
DeVos has taken on higher-education finances since being confirmed in February. She recently began rewriting rules on for-profit college debt and decided to put one company in charge of servicing loans.
The former financial aid chief operating officer, James Runcie, quit over proposed budget cuts, according to media reports, although the department said his poor management was a contributing factor.
Johnson has a Ph.D. in higher education leadership, according to Tuesday's announcement.
In a statement released by the department, Johnson said he looked "forward to accepting responsibility and accountability" for the programs with "a deep and sincere commitment" to borrowers.
Johnson's history as an executive with TSYS, First Data Corporation and similar card companies has at least one group of progressives worried.
The Allied Progress group said he would pursue "policies that increase the odds students will default on their loans."
Since 2012, the Consumer Financial Protection Bureau has received 1,121 complaints about First Data over prepaid and other cards. It has received 651 complaints regarding Netspend, acquired by TSYS in 2013. Many of the complaints, involving alleged fraud, improper charges and erroneous debt collection, were later resolved.
(Reporting by Lisa Lambert; Editing by Peter Cooney)