The CFPB student loan ombudsman abdicated his position and accused his boss and agency of protecting financial companies over borrowers.
By Mickie Shaw, Multimedia Editor
In a scathing resignation letter, the government student loan watch-dog accused the Consumer Financial Protection Bureau and his boss of betraying student borrowers and protecting the very lenders who are preying on “vulnerable” families.
Seth Frotman, the CFPB’s student loan ombudsman, quit his job after seven years in protest over Acting Director Mick Mulvaney’s politicization of the agency and no longer defending borrowers from bank fraud.
“The Bureau is now content doing the bare minimum for them while simultaneously going above and beyond to protect the interests of the biggest financial companies in America,” Frotman wrote to Mulvaney. “The Bureau has abandoned the very consumers it is tasked by Congress with protecting.”
Financial aid students at Valley College could be affected by the CFPB’s actions.
“The recent resignation of top Student Loan Official (Seth Frotman) is noteworthy as loan regulations and borrowers’ rights changes can affect students for a significant portion of their lives. I have learned that modifications to student aid policy typically reflects the values of whoever is in control of the Oval Office,” LAVC Financial Aid Manager, Vernon Bridges said.
Mulvaney became acting director in November. Frotman said that under Mulvaney’s tenure, drastic bureau changes have eroded the agency’s mandate to shield students and service members from bad lenders.
The agency’s “sweeping” changes, Frotman wrote, included: “Undercutting enforcement of the law, undermining the bureau’s independence and shielding bad actors from scrutiny.”
Frotman said the regulator has reneged on its promise to hold the loan and for-profit college industries accountable.
“For example … when new evidence came to light showing that the nation’s largest banks were ripping off students on campuses across the country by saddling them with legally dubious account fees,” Frotman wrote. “Bureau leadership suppressed the publication of a report prepared by Bureau staff.”
Frotman lambasted Mulvaney for his support of “the misguided goals of the Trump administration” and hurting families victimized by for-profit schools.
“The American Dream is under siege,” Frotman wrote.
Forty-four million Americans have student loan debts worth over 1.5 trillion dollars.
The CFPB is the financial regulator charged with protecting student loan borrowers from unethical lenders and making the lenders accountable to the law. Its has returned $750 million to victims of lenders who preyed on millions of customers.
A New York Times request for comment by the Bureau at the time of the resignation was not returned.