Cruel ironies abound as the Trump administration fails student loan borrowers. The man who brought you a phony university and paid a $25 million settlement to repay students for cheating them, now will kill the watchdog office that protects student borrowers from getting fleeced by lenders and collectors. This move comes in the same week that Americans’ student loan debt topped $1.5 trillion.
Consumer Financial Protection Bureau (CFPB) Mick Mulvaney told his staff he plans to shut down the Consumer Financial Protection Bureau’s (CFPB) Office for Students and Young Consumers, an investigative unit. He’ll move it into the office of consumer information.
The Office for Students and Young Consumer monitors predatory practices in student lending and is the only group that protects 44 million student loan borrowers from fraud and abuse. Since it began its work in 2010, the Office for Students and Young Consumers has:
- Returned more than $750 million to student loan borrowers.
- Helped more than 60,000 borrowers demand answers from student loan companies.
- Held companies like Navient and ITT Tech accountable for predatory practices.
On the CFPB website, it clearly shows how it helps students. Just read this:
“In response to our public inquiry into student loan servicing practices, we received over 30,000 comments from the public, highlighting the costly surprises and runarounds some borrowers face when dealing with their servicers. We documented these widespread servicing failures reported by borrowers in our recent report, Student Loan Servicing.”
Christopher Peterson, Financial Services Director at the Consumer Federation of America (CFA), said, “This action actively promotes greater profits for a handful of debt collection businesses at the expense of mistakes, neglect, and confusion for millions of student loan borrowers.”
Persis Yu, staff attorney and director of the National Consumer Law Center’s (NCLC) Student Loan Borrower Assistance Project, said,
“Mr. Mulvaney’s action is a naked ploy to silence an effective team looking out for student loan borrowers.”
The NCLC detailed ways that the Office for Students and Young Consumers attempted to ease the burden of the student loan system.
“In particular, the Office uncovered problems with the U.S. Department of Education’s implementation of income-driven repayment plans, eventually leading to a lawsuit against student loan servicer Navient for practices that caused borrowers to pay thousands of additional dollars on their federal student loans and added years to their repayment.”
Without adequate protection, consumer advocates worry that predatory practices will begin again and continue to trap students in debt for decades.
