Top student loan official quits, protests "misguided" administration

The U.S. government's top student-loan official resigned Monday and blamed the Trump administration, whom he accused of of "betraying" student-loan borrowers and selling out to lenders.
By Rick Docksai | Aug 28, 2018
The official overseeing the $1.5 trillion student-loan market resigned Monday, submitting a scathing letter in which he accused the Trump administration of having "abandoned young people and their financial futures." The official, Seth Frotman, had been the Consumer Financial Protection Bureau's (CFPB) student loan ombudsman but stated in his resignation letter that the administration and Mick Mulvaney, the CFPB's acting director, are severely undermining the agency's efforts to protect student-loan borrowers.

"Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting," he states in the letter, which he addressed to Mulvaney. "Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America."

Frotman served in his position for the last three years, during which he reviewed thousands of complaints from student-loan borrowers about private lenders, loan servicers, and debt collectors. His office was central to the successful return of hundreds of millions of dollars to aggrieved borrowers, and it facilitated lawsuits against student-loan company Navient and for-profit educational institutions ITT Tech and Corinthian Colleges.

The Trump administration significantly undercut Frotman's office over the last year, however. Mulvaney ordered substantial reductions in enforcement of anti-fraud statutes against colleges and lenders, and the U.S. Department of Education announced in August 2017 that it will no longer give the CFPB information about Education Department oversight of federal student loans.

Frotman noted these developments in his letter and concluded that Mulvaney and allies have done "damage" to the bureau. He also accused the bureau of suppressing a report by his office office that had indicated that major U.S. banks were "saddling (students) with legally dubious account fees."

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