Official tasked with protecting student borrowers resigns

Asserting that the Consumer Financial Protection Bureau (CFPB) under the Trump Administration “has turned its back on young people and their financial futures,” the bureau’s student loan ombudsman has submitted his resignation, NPR reports.

Seth Frotman has been with the CFPB since its launch in 2011, serving for the last three years as student loan ombudsman and overseeing the Office for Students and Young Consumers; in this role, NPR says, he has “reviewed thousands of complaints from student borrowers about the questionable practices of private lenders, loan servicers, and debt collectors.”

In his resignation letter, Frotman accuses the CFPB’s leadership of:

  • “Undermining enforcement of the law” by ending CFPB oversight of large student loan companies;
  • “Undermining the Bureau’s independence” by preventing agency staff from issuing warnings about the practices of for-profit schools and the Department of Education’s efforts to “shield student loan companies from accountability for widespread abuses”; and
  • “Shielding bad actors from scrutiny” by suppressing a report by Bureau staff describing “legally dubious account fees” imposed by banks on student borrowers.

Frotman’s resignation takes effect Sept. 1. A spokesman for the CFPB declined to comment to The Chronicle of Higher Education on Frotman’s accusations.

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