US Education Secretary Linda McMahon Talks University Funding Cuts
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Bloomberg Audio Studios. Podcasts, radio, news. Education Secretary Linda McMahon, she is taking part right now in a Bloomberg Newsmaker event. And our White House correspondent, Kayla Gardner, is speaking to her live, already in progress. Let's dip into that conversation. I don't recall any particular senator or congressman that, or congresswoman that I've had that conversation with. But generally speaking,

They are all for being behind raising test scores, having better performance for the students in our country. But I think at this point, I could probably honestly say that they're relatively evenly divided.

I want to talk about the headlines that we've seen from the administration. Obviously, several different agencies have revoked billions of dollars in funding to many private universities, including Harvard, Columbia, Cornell, Brown, Princeton. Which schools, if any, are on track to getting their funding back from the government?

The first university that we started this process with was Columbia. I visited with the then acting president, Katrina Armstrong, on campus at Columbia. And we basically were starting our conversation relative to anti-Semitism activities that had gone on before and that were still continuing in some ways, though some of it was a little better.

That's how we began our conversation. But then we wanted to look at other aspects of the programs that they had on campus, how they were vetting their students,

Did they believe that a lot of the uprisings on campus came from outside agitators or students that were on campus? What were some of the ways that they were managing those activities on campus? And I think we have had really good, open, honest discussions. I've now met with the current president of Columbia.

and had a telephone conversation with her. I'm sorry, I've met with her once, had two telephone conversations with her. And I think we've made great progress. Harvard's been a little more strident. They responded to our negotiation outreach with a lawsuit and have amended that lawsuit once. Still hopeful that these things can be resolved through negotiations. And I think just sitting in

And understanding what is really best for students that are on campus, that they can be sure that they're in a safe learning environment when they're there, not be afraid to go to class. But at the same time, we want to make sure if tax dollars are funding a lot of what is going on in the universities, those universities are abiding by the laws of the United States. Do the universities think that they will get their funding back at the end of their negotiations with the administration?

Are they saying that they are or are they asking will they? Well, would the administration allow them to get that funding back? That's part of the negotiations, of course, that we have that are ongoing. It would be my goal that if universities, colleges and universities are abiding by the laws of the United States and doing what we're expecting of them, that they could expect to have taxpayer funded programs.

Do you think there's a chance that President Trump leaves the White House in three years and some of these schools never see that funding come back?

I would hope that's not the case. We're certainly trying to move much more expeditiously. What we've seen since we really began this effort, you know, it was kind of a hard hammer at first. And so we've now seen a lot of other universities who are starting to look at their practices and their programs and getting ahead of the curve so that they can report back sort of self-monitoring. Self-monitoring is probably the...

not a good way to phrase it because we couldn't allow that at first, but certainly self-evaluation I think is a better way to say it. You've talked about universities potentially supplementing the funding that they've lost with their own endowments or potentially other sources. Do you see a future where the government no longer invest research dollars into some of the universities that have very large endowments?

Well, I think our universities do some remarkable research. And I think if we look at our research as for the public good, which I think that's intended, then taxpayers, I believe, are willing to see some of their tax dollars support that kind of really good research. And so I would certainly hope that would continue at the university level.

Okay, I want to ask you specifically about Harvard because no school has seen more funding revoked than Harvard University. The president recently said Harvard is starting to behave. What did he mean by that? And is Harvard back at the negotiating table at this point? Well, I would never like to pretend to say that everything that the president says that I fully can translate for you. But I think

Clearly what he's indicating is that we are, I think, making progress in some of the discussions we're having, even though they have taken a hard line. They have, for instance, replaced their head of Middle East studies. They have already put in place some of the things that we have talked about in our negotiations with Columbia. For instance, none of us is suggesting that on college campuses there shouldn't be discussion. There can be orderly discussion.

and nonviolent protests. I mean, college ought to be about the exchange of ideas and debate and all of that, but it has to be done peacefully. You can't have a protest as the...

I think it was the president of MIT that I met with last week, said, you know, you can't do a protest at 2 o'clock in the morning. You can't be in the halls of the library and prevent other students from getting to the library to study. But if there are places and time appropriate for a peaceful protest, they should be allowed. And I think we're all in agreement with that.

The IRS is reviewing Harvard's tax-exempt status. You're listening, by the way, to Bloomberg Businessweek, and we are bringing you a special conversation, Bloomberg Newsmakers conversation, with the Secretary of Education, Linda McMahon. She's speaking with our White House correspondent, Kayla Gardner. ... large endowments, $53 billion for Hartford, and that money doesn't just sit still. It is invested, and if it's invested well, they can expect a good return on that investment. And so as...

citizens of our country are providing tax support for those universities that do take federal tax dollars, then maybe some of that should come back to our citizens. - Is the administration planning more actions related to Harvard University? - At this particular time, we're continuing with the things that we've already talked about. One action we did take relative to Columbia was to make their creditor aware

that they needed to make sure that Columbia was abiding by the law of the land because they had an infraction with the Title VI civil rights, which was our position, and that they should examine that because part of the accreditor's position is to make sure that colleges are lawful or they can risk losing their accreditation.

Did something change in your conversations with Columbia that made you send that letter? Because you have been talking so positively about your conversations with the president, with the university generally.

I think one of the things that made us take another look at it is just we're looking at accreditation in general for colleges and universities because there has been some complaint about that, that we need to expand the number. When you think about the fact that all law schools are accredited by the ABA, it's like a real monopoly in some areas. There have been some

Times now that you could change your creditors used to be bound geographically, but some changes in the rules. So as we've looked at the creditors, we wanted to make sure, okay, let's make sure that we are touching all the bases that are relative to how our universities need to comport themselves.

So you think other universities' accreditation status should also be in question as well? I think we, accreditors, have a responsibility. It's built into what they're supposed to be doing. So we've reminded the Columbia accreditors, and I think all accreditors now will make sure that they are abiding by the terms of their agreements. In that letter to Columbia, you talked about federal student aid. Is that something that you would consider limiting for universities broadly if you can't come to an agreement with them? Ask me a different way.

I suppose, do you think that the administration, your department specifically, should restrict access to federal student aid for universities if you feel like they're violating civil rights?

Well, I think the, certainly the American citizens and taxpayers would expect that if colleges and universities, I would believe, and I've certainly heard, if their taxpayer dollars are going to those universities and that there is student aid coming for those, that we would expect that they would abide by, number one, abide by the law. And I think we

If a university is accepting federal aid, we've obviously looked at that federal aid. There's been reports that consent decrees were on the table with Columbia University. Is that accurate? Is that a tool that you would use? We've discussed a consent decree, and so our negotiations have gone back and forth. It's been part of the negotiations.

What we've seen over the past couple weeks has really looked like an all-of-government approach when it comes to higher education, whether it's the State Department or HHS. Can you walk us through how those decisions are made? Are you guys coordinating with each other? Are you speaking directly with the president before you take decisions? Well, the president clearly has a stated goal and gives direction, and we take that direction, obviously. But there are parts of it that hasn't all come necessarily at the same time.

when there was a focus on international students and should we stop international students from coming here or taking a look at their visas, et cetera, the State Department took on that branch of it. And the courts have reacted. I think it was yesterday. The courts said, no, that process needs to be reversed. We need to be allowing these students to come back in. But let's we then say, okay, well, let's just make sure we're

that we're conveying to these universities and colleges that as these students do come in, they need to know more about their background. Because when I've asked some of the presidents that I've talked to,

do you think that a lot of agitation has occurred on campus? Are they occurring with students who are going here? Are there outside agitators who are coming in? Do you see it happening more with foreign students than domestic students? And so it's really important, I think, to have a handle on that student population. And I think that's fair. And also universities, a little bit aside from students specifically, universities are required under Section 117 of the Higher Education Act to report

on the amount of foreign funding they're receiving and where it's coming from because we want to make sure there's no undue influence being levered against the United States. So is it best to say that agencies are making these decisions independently or are agencies coordinating with each other?

We have coordinated. In fact, we've had a task force. The first actions that were taken with Columbia was with the task force, which was GSA, HHS, and the Department of Education. We've also now brought in DOJ as part of the process as well. So yes, there is a coordination with the agencies. Okay, you mentioned international students.

The president has floated imposing a 15% cap on international students, specifically talking about Harvard University, but I suppose he could mean all universities. How would something like that work? I'm not quite sure, but clearly, but Harvard's foreign population right now is at about 27%. And we just want to make sure that, I think the president just wants to make sure that we're looking at making sure that

Students in the United States aren't penalized by allowing too many international students to come in. And so what is that right balance? I'm not sure what it is, but the president certainly floated 15%. So let's see, as we discuss that and investigate it, how that plays out. You're a former CEO. You came from the business world. Do you worry that less international students could make American companies less competitive? I think there is such merit.

and having international students be part of our university population. As I mentioned earlier, or I might not have mentioned in this interview, but as we were talking earlier, I served on the board of university in Connecticut, Sacred Heart University, for 16 years. So I know that having international students on campus does help with that cultural exchange. And we actually had a campus in Ireland.

from a sacred heart. So I really understand that exchange and how culturally it's very beneficial. So I want to make sure that we don't lose that. I think that's important for us to have. But on the same time, if you think about just last week when it was discovered in the backpack

of a research student at the University of Michigan, these fungus spores that were intended to be utilized against our agricultural products, those are the kinds of things that we have to make sure that we are on guard against. And whether that would be students with this country, but most of the time I think that would have the propensity at least to come in internationally. That could destroy your

your crops in America. I heard from the department, from the Secretary of Agriculture, when she was saying, you know, that these things are so dangerous because America feeds not only ourselves, but we feed the world. And if we are looking to destroy or weaken our crop production here, it's not only for our food, for our health, but it's also our national defense. So those kinds of measures, I think we have to be very, very specific and sure about.

You previously led the Small Business Week. This is Bloomberg Business Week. For those just tuning in, we're listening right now to U.S. Secretary of Education Linda McMahon. She's taking part in a Bloomberg Newsmaker event with our White House correspondent, Akayla Gardner. We'll get back to them right now. We first started to talk about dismantling the department, what function it would go, perhaps to which agencies.

He had asked about SBA, also asked about Treasury. We've talked about HHS, perhaps looking at the IDEA program, but all of that is still part of discussion. It's not an assignment in any way, except that Treasury has taken back over the collection of student loans as it always has done, served in that capacity. So that's not new relative to Treasury.

The reconciliation bill has a lot of changes to federal student aid and one provision in particular asks you to basically place a cap on the amount of loans that people can borrow based on the program that they're choosing. Have you started to calculate what it would cost to have a psychology degree or an engineering degree?

I've not actually started that process yet, except in conversations. I know that Congress had started a lot of that kind of work and had done some research relative to what the mean cost was across the country to take different courses. And should lending kind of be based on that median or that mean cost?

That is one of the things that I think it was Representative Fox who has worked so diligently to bring down the cost of college, one of the things that she talked about. And so that is something to look at, especially for students who can graduate so overburdened by debt and not really understanding that the profession that they have chosen

could never give them the amount of income, or at least the projected or the proven stated amounts of income that they might receive to pay off that loan. And part of what we are doing with the restructuring of the FAFSA application for college is trying to work in some language eventually that will say,

this is what you could expect to earn relative to this kind of degree and program. This is what this college charges for. This is what a different college would charge for. Put this into your calculus as to where you would like to go to school and have the biggest ROI on what you're doing. I think those are really sensible measures to be taking and how to look at it because so many students have no ideas. I'll tell you just a little side story. When I was running for the Senate,

in Connecticut back in 2010, and I went to a freshman class in college. And I asked, I said, "Of all of you who are in this class, how many of you have student aid?" You know, 95% of hands go up. I said, "How many of you know how much interest you're paying on that loan?" Maybe half the hands went up. I said, "How many of you know the actual amount of the loan?" Fewer. I said, "How many of you know what kind of a job you would have to have and how much money you'd have to make to start repaying this loan?" Not a single hand went up.

So I think we need to provide students with better tools of assessing the value of what education they need

And do they need a four-year college? Or are they better suited for some other kind? Is it community college? Are we looking at our skill-based education? How does technology and AI play into all of that in their learning process? I think we kind of need to rethink our whole culture of how we look at education. - Okay, my last question before we turn to the audience. Would you make those calculations public? Because it could affect

what major students decide to pursue. Oh definitely, they'll be part of the public forum and I think it's a that's a great thing to share with you know with anyone who's contemplating going you know to class and going to college or university or community college or however they decide to look at their career. That's I think vital information for them to have and for parents.

OK, so we're going to go ahead and take some questions from the audience. If you could just raise your hand. We just ask that people say your name and organization before you ask your question. All right. I think we will jump out now. You can follow that event on live go on the Bloomberg Terminal, L-I-V-E, go to hear more from Secretary of Education Linda McMahon talking with our White House correspondent, Kayla Gardner, at a Bloomberg Newsmakers event.

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