Federal Official Who Oversees Federal Student Loans Resigns in Protest; Trump Admin. Favors Banks Ov
Seth Frotman, the student loan watchdog at the Consumer Financial Protection Bureau [CFPB] quit yesterday saying the Trump administration has made it impossible to effectively protect students from predatory loan and collection practices. He addressed his resignation letter to Mick Mulvaney, President Trump's acting director of the CFPB.
The Guardian: “You have used the bureau to serve the wishes of the most powerful financial companies in America,” Frotman wrote, addressing his letter to Mulvaney. “The damage you have done to the bureau betrays these families and sacrifices the financial futures of millions of Americans in communities across the country.”
New York Times: "Mr. Frotman’s position was mandated by Congress eight years ago, when it created the bureau, to serve as a watchdog over the $1.5 trillion student loan market. The office fields about 23,000 complaints a year, covering problems with lenders, debt collectors and a growing number of companies selling “debt relief” services — a market often plagued with fraud. Mr. Frotman had held the job since 2016."
"In his letter, Mr. Frotman accused Mr. Mulvaney and his top lieutenants of undermining the bureau’s career staff and interfering with their efforts to oversee student lenders. Last year, Mr. Mulvaney’s team suppressed the publication of a report drawing attention to legally questionable fees charged on college students’ bank accounts, Mr. Frotman said."
NPR: "Christopher Peterson, director of financial services at the nonprofit Consumer Federation of America, called the move "an appalling step in a longer march toward the elimination of meaningful American consumer protection law."
You can read Mr. Frotman's resignation letter here.
Additionally, the Trump Administration has also taken steps through the Department of Education to reduce oversight of the student loan industry, especially at for-profit institutions.
NPR: "The Justice and Education departments have argued that debt collectors should be protected from state efforts to regulate them. And, earlier this month, Education Secretary Betsy DeVos moved to scrap a rule meant to punish schools where graduates struggle with poor earnings and deep debt. The department defended its decision, saying it would instead give borrowers school performance data so they can decide for themselves what colleges offer the best value."
Photo: Mick Mulvaney, Acting Director of CFPB