A former top Consumer Financial Protection Bureau (CFPB) official announced late last week the launch of a new organization to “lead a coordinated, nationwide effort to protect student loan borrowers and end the student debt crisis” by targeting the private student loan market.
According to the website for the “Student Borrower Protection Center” (SBPC), which is being led by former CFPB assistant director and student loan ombudsman Seth Frotman, the non-profit organization will fulfill this goal by working with state and local policymakers to “challenge a Trump administration that is determined to protect financial companies and cheat borrowers on every front.”
“Tens of millions of American families are trapped in a broken student loan system, squeezed by rising debt and widespread abuses by a predatory industry,” Frotman said in a press release. “The federal government hasn’t just walked away from the fight on behalf of borrowers, it is actually arming the other side. The Student Borrower Protection Center is here to fight back—in state capitals, in Congress, in court, and in communities across the country.”
Once @BetsyDeVosED and @mickmulvaneyOMB took over, we saw our government turn its back on millions of Americans drowning in #studentloan #debt. We decided we needed to do more—and that was the start of @theSBPC. Help us #protectborrowers.— Seth Frotman (@sethfrotman) November 28, 2018
Frotman stepped down in August after seven years serving CFPB, writing in his resignation letter that he was leaving the position because “the bureau has abandoned the very consumers it is tasked by Congress with protecting.” He is joined in this new effort by other ex-CFPB officials including his former deputy Mike Pierce, who resigned at the same time, and former policy analyst Bonnie Latreille.
The SBPC, according to its website, is focused on a handful of efforts—with more to be announced shortly—including leading a dozen of states to consider legislation next year regarding more accountability from the student loan industry, developing a “roadmap for local leaders” to help them advocate for borrowers in their jurisdictions, and helping to create “a bill of rights” for students in California.
The website also details the creation of the “Student Loan Justice Fellowship” program, which is comprised of attorneys, advocates, and researchers who will “develop original, groundbreaking analysis and to investigate the real-life impact of America’s student debt crisis.”
“This effort will unlock the insight of established professionals working in courtrooms and communities across the country and leverage their experiences to drive policy change,” according to the press release.
One the issues the SBPC highlights on its website is the question of the federal preemption of state laws attempting to regulate loan servicers operating in their borders. Despite guidance published earlier this year by Education Secretary Betsy DeVos reiterating the federal government's sole authority over servicers, the former CFPB officials wrote in a frequently asked questions document on the website that “if Congress intended to preempt states from regulating ‘the field’ of student loans, it would have done so. Instead, Congress, through the Higher Education Act, restricted narrow categories of state lawmaking.”
“No one is advocating for state regulation of the federal government, but borrowers urgently need a cop on the beat to police these big businesses,” the officials wrote.
This overall effort to create a non-profit group to assist students is reminiscent of the creation of the National Student Legal Defense Network (NSLDN), which was established in 2017 by former Department of Education (ED) officials, who, according to the group’s website, “were deeply concerned that federal higher education policies were moving in the wrong direction, especially on the critical issues of student debt and consumer protection.” They have taken issue with ED for things from gainful employment to the reinstatement of the Accrediting Council for Independent Colleges and Schools (ACICS).
Publication Date: 12/3/2018