According to a breaking news report from the Associated Press, the nation’s most senior official who oversees the $1.5 trillion loan market has resigned in protest over what he says is Trump’s hostile policies towards students in debt.
In his resignation letter, Seth Frotman says he stay at his position as student loan ombudsman until the end of the week.
From the AP:
Frotman is the latest high-level departure from the Consumer Financial Protection Bureau since Mick Mulvaney, President Donald Trump’s budget director who has been also acting director of the bureau, took over in late November. But Frotman’s departure is specifically notable, since his office is one of the few parts of the U.S. government that specifically was tasked with handling student loan issues.
Addressing Mulvaney in his letter, Frotman accused the Trump administration of using the agency “to serve the wishes of the most powerful financial companies in America.”
“Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting,” Frotman wrote, addressing Mulvaney and the Trump administration.
Frotman has served in his position for the past three years. The position was created by Congress in 2010 in response to the financial crisis. As ombudsman and assistant director, Frotman oversaw the CFPB’s Office for Students and Young Consumers and fielded complaints from student borrowers about the practices of private lenders, loan servicers and debt collectors.
In a tweet this Monday morning, Sen. Dick Durbin (D-IL) wrote that Frotman’s resignation is a result of the Trump administration forcing “another cop from the beat when it comes to protecting students from predatory #4profit colleges, loan servicers, and repayment scams.”
“It is shameful,” Durbin tweeted. “I thank Mr. Frotman for his hard work and years of service on behalf of students & taxpayers.”
The Trump Administration has forced another cop from the beat when it comes to protecting students from predatory #4profit colleges, loan servicers, and repayment scams. It is shameful. I thank Mr. Frotman for his hard work and years of service on behalf of students & taxpayers. https://t.co/5WcHloOJSW
— Senator Dick Durbin (@SenatorDurbin) August 27, 2018
Since 2011, the CFPB has reviewed more than 60,000 student loan complaints and returned more than $750 million to aggrieved borrowers, NPR reports. But the office underwent a change since Trump took over the presidency, and that change was reflected in Frotman’s letter.
“The Bureau’s current leadership folded to political pressure… and failed borrowers who depend on independent oversight to halt bad practices,” Frotman wrote.
The Trump administration has also taken steps outside the CFPB to curb oversight of the student loan industry. The Justice and Education departments have argued that debt collectors should be protected from state efforts to regulate them. And, earlier this month, Education Secretary Betsy DeVos moved to scrap a rule meant to punish schools where graduates struggle with poor earnings and deep debt. The department defended its decision, saying it would instead give borrowers school performance data so they can decide for themselves what colleges offer the best value.
Frotman also accused CFPB leadership of suppressing a report he prepared which revealed that some of the nation’s largest banks were “saddling [students] with legally dubious account fees.”
Featured image: Rick Mulvaney (via YouTube screen grab)