The Consumer Financial Protection Bureau’s student loan ombudsman announced his resignation from his position early this week. In his resignation letter, which was published on NPR.org, Seth Frotman discussed the need for entities such as the CFPB.
“For many, the CFPB has served as a lifeline – cutting through red tape, demanding systematic reforms when borrowers are harmed, and serving as the primary financial regulator tasked with holding student loan companies accountable when they break the law,” he wrote.
The bureau has been responsible for the return of more than $750 million to borrowers of student loans, he added.
Frotman included strong language about the current administration and the CFPB’s acting director Mick Mulvaney in his resignation letter, alleging they don’t have the best interest in their minds for college students who seek loans.
An ombudsman is an official who is appointed to look into complaints lodged against administrations – they are viewed as public advocates. And protecting borrower’s rights is an important task because currently there is more than $1.5 trillion collectively in student loans in the U.S. The student loan industry has become a big, lucrative business and it appears to grow every year as a secondary education becomes more expensive for students to obtain.
The History of the CFPB
Although Frotman had only been student loan ombudsman for three years, he had worked at the CFPB since it first opened its doors. The CFPB, which was founded in 2011, has assisted with over 60,000 student loan complaints and issues.
The CFPB also played a part in some key lawsuits, including those against for-profit schools ITT Tech and Corinthian Colleges.
Frotman had previously worked under Holly Petraeus in the Office of Servicemember Affairs. Petraeus has since retired from that position, but she commended Frotman in the NPR article.
“I think he’s leaving for the purest of motives: He wants to help student borrowers,” she said in the article.
While some watchdog groups in recent months have expressed displeasure with the changes Mulvaney had announced for the CFPB, the Trump Administration has maintained that protecting student loan borrowers is a priority.
Author: Shannon Serpette
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