A Student Loan Official Quit His Position In The Trump Administration For A Troubling Reason
There's one government agency, the Consumer Financial Protection Bureau (CFPB), that is essentially tasked with protecting the unsuspecting public from predatory actions on the part of financial companies. One department of the CFPB deals with student loans — and according to someone leaving that office, it's not in great shape. A student loan official quit his position, and he made sure to let the agency know why on his way out.
The former student loan ombudsman, Seth Frotman, wrote that the CFPB under President Donald Trump "has turned its back on young people and their financial futures," according to a letter obtained by NPR. For the last three years, his major concern at the bureau was making sure that student didn't finish their education only to be left saddled with questionable, predatory loans. In his letter, which was addressed to CFPB head Mike Mulvaney, Frotman claimed that the bureau had "abandoned the very consumers it is tasked by Congress with protecting. Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America."
During Mulvaney's confirmation process, senators raised questions over Mulvaney's previously expressed disdain for the CFPB, as Vox noted. Specifically, he called the bureau a "sick, sad joke."
Mulvaney's leadership at CFPB had begun to fall under the scrutiny of consumer protection advocates by May of 2018, when NPR reported that the office watching out for predatory student loans had effectively been demoted to a department within another of the bureau's offices. And according to Frotman's letter, these fears were not overblown.
"As the Bureau official charged by Congress with overseeing the student loan market, I have seen how the current actions being taken by Bureau leadership are hurting families," Frotman wrote, before detailing the "sweeping changes" that have occurred under Mulvaney's leadership.
As Frotman wrote, these included "undercutting enforcement of the law," "undermining the Bureau's independence," and "shielding bad actors from scrutiny."
Summing it up, Frotman listed the public's needs, which he evidently believed that Mulvaney's CFPB wasn't meeting:
American families need an independent Consumer Bureau to look out for them when lenders push products they know cannot be repaid, when banks and debt collectors conspire to abuse the courts and force families out of their homes, and when student loan Companies are allowed to drive millions of Americans to financial ruin with impunity.
Going back specifically to student loans, Bloomberg reported in February of 2018 that the Department of Education was also seeking ways to protect student loan debt collectors rather than the students themselves. As NPR noted, this was already part of a pattern of the Trump administration siding with financial institutions over individual citizens. According to NPR, though, the U.S. has a combined $1.5 trillion in student loan debt — with an average of $34,000 in debt per borrower, as Business Insider reported. This debt then goes on to affect the borrowers in ways that the degree they earned can't always make up for — and now, students everywhere don't have the same level of protection from the government that they could count on in the past. Thanks to Seth Frotman, the public now knows just a little bit more about what it's missing out on.