Saying that the Trump administration “has turned its back on young people and their financial futures,” the federal official in charge of protecting student borrowers from predatory lending practices has quit, NPR reported on Monday.
In a scathing resignation letter, Consumer Financial Protection Bureau (CFPB) Student Loan Ombudsman Seth Frotman accused the bureau’s acting director Mick Mulvaney and the Trump administration of undermining the CFPB and its ability to protect student borrowers.
“Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting,” Frotman, who has served as the ombudsman for the past three years, wrote in the letter. “Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”
Congress created the position of ombudsman in 2010 following the financial crisis, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and since 2011 the CFPB has reviewed more than 60,000 student loan complaints and returned more than $750 million to aggrieved borrowers, according to NPR.
But over the past year, the Trump administration has increasingly sidelined the CFPB’s student loan office, and Frotman’s letter raises serious questions about the government’s willingness to oversee the $1.5 trillion student loan industry and to protect student borrowers.
Last August, the Department of Education announced it would stop sharing information with the bureau about the department’s oversight of student loans, calling the CFPB “overreaching and unaccountable” and arguing that the its actions were confusing both borrowers and loan servicers.
Frotman, however, slammed that move by saying the bureau “folded to political pressure… and failed borrowers who depend on independent oversight to halt bad practices.”
In May, Mulvaney, who before joining the Trump administration was a fierce critic of CFPB as a GOP congressman from South Carolina, called for a major shake-up in Frotman’s division, signaling a symbolic shift in mission from investigation to information-sharing.
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