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Former CFPB Director Richard Cordray Selected to Lead FSA

By Owen Daugherty, NASFAA Staff Reporter

The Office of Federal Student Aid (FSA) has found a new chief operating officer (COO) to fill the leadership void, with Richard Cordray being announced by the Biden administration Monday as the next to lead the office, which manages the $1.6 trillion student loan portfolio.

Cordray previously served as the director of the Consumer Financial Protection Bureau (CFPB) and the attorney general of Ohio and will be tasked with overseeing the nation’s student loan portfolio, along with a new strategic operating plan at FSA, among other things. 

“It is critical that students and student loan borrowers can depend on the Department of Education for help paying for college, support in repaying loans, and strong oversight of postsecondary institutions,” Education Secretary Miguel Cardona said in a statement announcing Cordray’s selection. “Cordray has a strong track record as a dedicated public servant who can tackle big challenges and get results.”

The selection could signal a shift for the relatively obscure government office that has become the subject of increased attention and scrutiny as calls to reform the student loan landscape have intensified in recent months.

NASFAA in a statement welcoming Cordray noted the shift in the office’s role in recent years.

“If ever we needed a sign that Federal Student Aid is a different organization than it was when it was created 20 years ago, the appointment of Richard Cordray is it,” said NASFAA President and CEO Justin Draeger. “Mr. Cordray brings political and practical experience unlike any previous FSA chief operating officer. He will need those skills and more to address the significant challenges ahead that will impact millions of student aid applicants and recipients, the most acute being the successful onboarding of 40 million borrowers back into federal student loan repayment.”

Sen. Elizabeth Warren (D-Mass.), a leading progressive and chair of the Senate Banking, Housing and Urban Affairs Committee's Subcommittee on Economic Policy, called for the ousting of former FSA head Mark Brown due to his ties to former Education Secretary Betsy DeVos and his perceived mismanagement of federal student loan programs. Brown was appointed by DeVos and had a full year remaining on his term. 

Warren applauded the choice in a post on Twitter Monday.

“I’m very glad he’ll be protecting student borrowers and bringing much-needed accountability to the federal student loan program,” she wrote.

Rep. Virginia Foxx (R-N.C.), ranking member of the House Education and Labor Committee, noted her displeasure with the selection in a statement.

"A $1.5 trillion student loan portfolio requires savvy financial management,” she said. “I am skeptical that a failed Democrat politician, who has a history of getting consumed by politics instead of caring for consumers, has the capability and serious character required to carry out the duties of COO of FSA."

In the short term, Cordray will be tasked with transitioning tens of millions of borrowers back into repayment after Sept. 30, 2021, when the federal forbearance period is set to expire.

Beyond that, FSA is set to negotiate new contracts with loan servicing companies to collect student loan payments and will be a key player in overhauling the FAFSA in the coming months. 

“We congratulate him on his selection and look forward to working with our federal colleagues, under Mr. Cordray's leadership, to tackle these and many other operational and strategic challenges faced by Federal Student Aid,” Draeger added in his statement.

 

Publication Date: 5/3/2021


James C | 5/4/2021 9:28:37 AM

It seems like a solid choice. Hopefully he will put pressure on loan servicers to step up their game when it comes to providing accurate and comprehensive information to loan borrowers.

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