NEW YORK (AP) — A former top government official who oversaw the $1.5 trillion student loan market has decided to start a new private organization that he believes will do a better job protecting student…
NEW YORK (AP) — A former top government official who oversaw the $1.5 trillion student loan market has decided to start a new private organization that he believes will do a better job protecting student borrowers than his current government counterparts.
Seth Frotman resigned from the Consumer Financial Protection Bureau in late August. In a much publicized resignation letter, he alleged that the current administration was failing at its job of protecting student borrowers, and even impeding other people’s ability to do so. After a three-month hiatus, Frotman is launching his own organization, called the Student Borrower Protection Center.
“The federal government hasn’t just walked away from the fight on behalf of borrowers, it is actually arming the other side,” Frotman said in a statement. “The Student Borrower Protection Center is here to fight back — in state capitals, in Congress, in court, and in communities across the country.”
Roughly 44 million Americans have some sort of student loan outstanding, with the average amount of debt being around $30,000. The amount of student loan debt has become a national topic, particularly as younger Americans struggle to buy a home or cannot afford to do much else than repay their loans.
Frotman hopes his new organization will be able to step in and help state and local authorities where enforcement at the federal level has been scaled back under President Trump. The organization is partnering with the University of California-Irvine to publish new research on the issue of student loans.
For example, five states are currently suing Navient, one of the nation’s largest student loan servicing companies, alleging that the company steered borrowers into higher cost repayment plans. Navient denies those allegations, but an investigation by The Associated Press this month found that the Department of Education, headed by Secretary Betsy DeVos, had evidence that the states’ lawsuits against Navient may have merit and chose to withhold that report from authorities.
DeVos has also hired a former for-profit college executive to run the Education Department’s Student Aid Enforcement Unit.
The CFPB, which is currently run by President Trump’s budget director Mick Mulvaney, has also stepped back from tackling problems regarding student loans. Mulvaney moved its student and young consumers office under the blanket of consumer education and has stripped the office of its investigative powers.