The top federal official in charge of protecting student borrowers from predatory lenders announced his resignation on Monday. In his resignation letter, Seth Frotman, the Consumer Financial Protection Bureau (CFPB) student loan ombudsman, said the Trump administration is allowing student loan companies to “drive millions of Americans to financial ruin with impunity.”
Frotman had served as the bureau’s student loan ombudsman for three years. Since the ombudsman office started work in 2011, it has examined over 60,000 complaints about student lenders, debt collectors and debt relief companies and has been responsible for student borrowers being refunded more than $750 million.
But according to Frotman, a series of “sweeping changes” under CFPB Acting Director Mick Mulvaney has effectively crippled the CFPB’s ability to enforce laws protecting student borrowers.
“You have used the bureau to serve the wishes of the most powerful financial companies in America,” Frotman wrote. “The current leadership of the bureau has abandoned its duty to fairly and robustly enforce the law.”
The Trump administration has not only taken actions that allegedly undermine federal protections for student borrowers, it has also taken steps that make it harder for states to challenge predatory lenders.
In June, the U.S. Department of Education stopped its long-established practice of sharing information about student loans with state officials. Iowa Attorney General Tom Miller joined with 19 other state attorneys general in a July 13 letter to Education Secretary Betsy DeVos, urging her to reverse policy.
“Last month, the Department quietly eliminated its policy on disclosures of consumer complaints and related information for use by law enforcement agencies, including disclosures for use in criminal and civil fraud investigations,” the attorneys general’s letter said. “The Department offered no justification for abandoning its long-standing practice, stating merely that it ‘no longer intends to disclose any records under this routine use.’”
DeVos has not restored the information-sharing program that began in 2000.
According to the Iowa College Student Aid Commission, students graduating from the state’s three public universities in 2017 had an average debt of $27,313. Among the three universities, the University of Iowa had the lowest percentage of students graduating in debt, 49 percent, but the highest average level of student debt, $28,405.
