Corrected: This article originally misidentified a company that Betsy DeVos was asked about in her confirmation hearing to be U.S. secretary of education. Social Finance Inc., or SoFi, is a San Francisco-based finance company specializing in student loan refinancing, wealth management, and other services. The story mistakenly identified another organization with the same name.
Betsy DeVos, the nominee to be the next U.S. secretary of education, last week sought to allay the concerns of Senate Democrats by vowing to divest any financial stakes she has in education-related companies.
“Let me be very clear about any conflicts,” DeVos said during her nearly four-hour confirmation hearing before the Health, Education, Labor, and Pensions Committee on Jan. 17. “Where conflicts are identified, they will be resolved. I will not be conflicted, period. I commit that to you all.”
Amid a range of other concerns about DeVos’ fitness to lead the Department of Education, several Democrats on the education panel expressed unease that the hearing had gone forward before the nominee completed her financial disclosures and a federal ethics agreement—both of which were finished and made public later in the week.
“I believe that in an administration where lines around potential conflicts of interest are very likely to be blurred at the top, they need to be even clearer at the individual agencies,” said Sen. Patty Murray of Washington, the ranking Democrat on the committee.
Sen. Chris Murphy, D-Conn., said committee Republicans were conducting a “rush job” that “suggests this committee is trying to protect this nominee from scrutiny.”
The panel’s chairman, Sen. Lamar Alexander, R-Tenn., repeatedly praised DeVos and said that at least one Republican nominee for the post—Rod Paige, who was President George W. Bush’s first education secretary—had his hearing before completing his ethics agreement.
DeVos and her husband, Dick DeVos, whose father co-founded Amway, are part of a family whose fortune is estimated at $5.2 billion by Forbes magazine. The couple have funded causes that include pushing for charter schools and private school vouchers. DeVos told the committee last week she would accept only a token $1 a year salary if confirmed.
Besides expressing concerns about the nominee’s education policy priorities and her lack of experience in public education, committee Democrats also asked DeVos about direct or indirect investments in several education companies.
Three Investments Cited
Specifically, they cited K12 Inc., a Herndon, Va.-based online-learning provider; Social Finance Inc., a San Francisco-based finance company specializing in student loan refinancing, wealth management, and other services; and Performant Financial Corp., a Livermore, Calif.-based company that, among other things, helps recover defaulted student loans.
DeVos and her husband are investors in RPM Ventures, an Ann Arbor, Mich., venture-capital firm that has been a funder of Social Finance, or SoFi.
After Murray asked her about SoFi and K12, DeVos said: “With respect to the specific ones that you cited, one of them, we’re aware of as we start the process, and that is in the process of being divested. If there are any others that are identified, they will be appropriately divested as well.”
Murphy pressed her on K12 Inc., saying the company was part of an industry that “is profiting from public education dollars that is essentially taking money away from students to pay salaries for CEOs.”
DeVos replied: “When it comes to education, I think what’s important are what the outcomes are, what the achievements are. I don’t think the delivery mechanism is the issue as much as it is are students receiving the benefits of a great education.”
Documents Released
Subsequent to the hearing, the Office of Government Ethics posted DeVos’ ethics letter and financial-disclosure documents.
The Jan. 19 letter was addressed to Marcia Goodridge-Keillor, the “designated agency ethics official” at the Education Department.
“The purpose of this letter is to describe the steps that I will take to avoid any actual or apparent conflict of interest in the event that I am confirmed” as secretary, DeVos writes. She says that within 90 days of her confirmation, she will divest stakes in 102 assets that pose potential conflicts.
Most of those are larger entities (such as Berkshire Hathaway Inc.) or venture funds (such as Vista Equity Partners Fund VI) that apparently have stakes in education-related companies. The one clear education stock on the list is Knowledge Universe Education LP, which operates KinderCare Education. Her stake in Knowledge Universe is listed as between half-a-million and $1 million.
DeVos relates in the letter that Goodridge-Keillor has “advised me that it is not necessary at this time for me to divest my remaining interests in entities disclosed in my nominee public financial-disclosure report, inasmuch as the likelihood that I will need to participate in any particular matter affecting these entities is remote.” But she adds that she will remain vigilant in identifying potential conflicts.
