Trump Appointee Shuts Down CFPB Office for Students and Younger Consumers: What Our Partners and Allies Think
In yet another move to undermine the effectiveness of institutions designed to protect us from some of the most rampant abuses by for-profit companies, President Trump’s Acting Director of the Consumer Financial Protection Bureau (CFPB), Mick Mulvaney, announced on May 9, 2018 that the Bureau will dismantle the Office of Students & Younger Consumers.
Since 2012, this office has worked tirelessly to bring to light systemic issues with our student loan system, recovering billions of dollars on behalf of student loan borrowers and driving bipartisan reform efforts to further protect them. Now, with this “agency reorganization”, it is a blow to the agency’s structural ability to take action against student loan companies who engage in predatory practices against student loan borrowers.
While having long-term implications for the financial health of borrowers, a present concern for consumer advocates is that it is unclear what will happen to the CFPB’s ongoing lawsuit against the large student loan servicer, Navient, who was sued under the previous CFPB directorship over findings it committed widespread fraud and abuse against student loan borrowers.
Worse, this CFPB announcement comes on the same day as the announcement that interest rates on new federal student loans for the coming academic year will jump by more than half of a percentage point.
Many consumer and students’ rights advocates have reacted strongly to this move by Mulvaney. Here is what we and our partners among them had to say:
Full statements accessible via hyperlinks, where available.
Americans for Financial Reform Senior Policy Analyst, Alexis Goldstein
“America is facing an ongoing student debt crisis, with outstanding student debt surpassing $1.5 trillion and over 8 million borrowers in default on their student loans. Closing the Office for Students is like shuttering the fire department in the middle of a three-alarm fire.”
Center for American Progress Associate Director for Postsecondary Education, Colleen Campbell
Acting Director Mick Mulvaney’s decision to close the Office of Students and Young Consumers is a direct attack on every American who enrolls in higher education…The role of the Office of Students and Young Consumers is not limited to protecting student loan borrowers. It also ensures that campus-based checking accounts and prepaid cards are affordable for students; that students have access to information and options for various financial instruments; and that college credit card agreements are compliant with federal law. Now, there will be no consumer finance experts minding these programs, leaving students vulnerable to predatory actions.”
Center for Responsible Lending Policy Counsel, Whitney Barkley-Denney
“Since its creation, the CFPB has worked to curb abuse, including suing the largest servicer for failing to effectively serve borrowers, successfully securing $480 million in relief for borrowers who attended the now-shuttered Corinthian Colleges, documenting widespread failures, monitoring and addressing servicing complaints, and working with other agencies, including the Department of Education, to develop best practices for servicers and share information so that borrowers are better protected…The White House should immediately nominate a CFPB director who will refrain from destroying the programs that Mulvaney’s predecessor put into place, and who rather will build on the reforms that student borrowers and all Americans need for their lives to work.”
Consumer Action National Priorities Associate, Alegra Howard
“While it is not a surprise that Acting Director Mulvaney is continuing with his efforts to dismantle and weaken the CFPB, it is a gross disservice to those hoping to improve their lives through education…Mulvaney continues to neglect the Bureau’s mission to protect consumers by putting the interests of financial institutions and banks ahead of those the agency was created to protect.”
Consumer Federation of America Financial Services Director, Christopher Peterson
“Shuttering the CFPB’s student lending office is an appalling step in a longer march toward the elimination of meaningful American consumer protection law…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.”
“The Trump Administration’s decision to close the one office in the federal government exclusively dedicated to protecting student loan borrowers is an about-face on the President’s student lending campaign promises…The Trump Administration is turning its back on a generation of student loan borrowers.”
Consumers Union Senior Attorney, Suzanne Martindale
“The Office of Students and Young Consumers has been instrumental in uncovering rampant lending abuses and deceptive practices that make it difficult for borrowers to manage their education debt responsibly…It makes no sense to eliminate this critical office at a time when millions of Americans need a watchdog working to make sure lenders and loan servicers are following the law and treating them fairly.”
Generation Progress Executive Director, Maggie Thompson
“Closing the Office of Students and Young Consumers will wreak havoc on borrowers’ repayment processes. Borrowers already have very little consumer protections to defend themselves against the predatory behavior of student loan servicers. Hamstringing the CFPB’s ability to act in their defense will cause serious and lasting harm to borrowers’ financial health. Servicers have a track record of putting profits over their borrowers’ well-being by illegally charging excess interest on servicemembers’ loans, causing processing delays, denying applications without warning, and losing borrowers’ paperwork. The industry has been transparent about their priorities. In early 2017, Jack Remondi, the CEO of the largest student loan servicer, Navient, publicly stated that his company operates with “no expectation that the servicer will act in the interest of the consumer.”
National Consumer Law Center Student Loan Borrower Assistance Project Director, Persis Yu
“Congress charged the consumer bureau with protecting student borrowers from abusive financial lenders who break the law…The $1.5 trillion-dollar student loan industry needs a tough cop on the beat. Mr. Mulvaney’s action is a naked ploy to silence an effective team looking out for student loan borrowers.”
Student Debt Crisis Executive Director, Natalia Abrams
“Who will police student loan companies and for-profit colleges now? Americans are defaulting on their student loans at the highest rate in history. Yet, this plan undermines the only federal advocate committed to protecting borrowers. This comes at a time when we are facing disastrous policy rollbacks at the Department of Education as well. Our supporters fear there is no longer a consumer protection agency for student loan borrowers.”
From the TICAS Twitter account (@TICAS_org). Click on the hyperlink above to see the full chain:
“BREAKING: @CFPB is dismantling its Office of Students and Younger Consumers, folding it into its financial education office. Why now, when so many borrowers are at huge risk to default on their #studentdebt? #DefendStudents” Link
“The @CFPB, acting on complaints from #studentloan borrowers, has produced more than $750 million in #studentdebt relief & strengthened protections for many more, including #vets & service members. Is now the time to dismantle this work? #DefendStudents” Link
These wins for students & borrowers are exactly what an agency devoted to CONSUMER FINANCIAL PROTECTION should be doing. This move to dismantle the Office of Students and Young Consumers is devastating for students. @cfpb #studentloans #studentdebt #DefendStudents
From the Veterans Education Success Twitter account (@gibillrights). Click on the hyperlink above to see the full chain:
“We are deeply concerned by news this afternoon that @MickMulvaneyOMB is shuttering the office of student loan protections at #CFPB, which had sued students loan companies and banks that had defrauded students. We urge @realDonaldTrump to reinstate the office, #protectstudents”
Young Invincibles Government Affairs Director, Reid Setzer
“By dissolving the Students and Young Consumers Division, Acting Director Mulvaney is directly harming the interests of young people. The division was instrumental in helping students and young consumers navigate a confusing and costly system, as well as taking legal action against lenders, predatory for-profit colleges, loan servicers, and debt collectors who misled young people. During a week where national student loan debt hit $1.5 trillion, this sends clear signals that the CFPB is moving in the same direction as the Department of Education under the Trump Administration: away from protecting students and consumers and toward enabling unscrupulous corporations who place profits over young people.”
Posted on 9 May 2018