The U.S. student loan ombudsman, the top government official in charge of protecting student borrowers from predatory practices by lenders and loan servicers, announced that Monday he was resigning his post in protest at the end of this week.
Seth Frotman’s resignation letter, obtained by the Associated Press and National Public Radio, offered scathing words about what he said was a shift by the Consumer Financial Protection Bureau (CFPB) under current head Mick Mulvaney — and the Trump administration more broadly — to protect major financial interests over the needs of consumers.
“Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting,” Frotman’s letter read. “Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”
Consumer advocates reacted with dismay to the news, while continuing to take the White House to task for what they see as the erosion of student loan and other consumer protections since early 2017, when President Donald J. Trump took office.
What does the student loan ombudsman do?
As the student loan ombudsman, Frotman served as an advocate for student borrowers in their complaints against student loan servicers.
When dealing with servicers, the ombudsman can help borrowers get the information they need, as well as help them get relief when they’ve been wronged.
Frotman’s resignation comes after the decision to close the Office for Students and Young Consumers, the only federal government office specifically tasked with protecting student borrowers.
“Assistant Director Frotman has been a champion of the 44 million Americans who owe student debt,” Christopher Peterson, the director of financial services at the Consumer Federal of America, said in a press release. “His work at the CFPB has curbed industry abuse and reclaimed hundreds of millions of dollars for student loan borrowers.”
Since its inception, the CFPB has overseen the return of about $750 million to student borrowers who suffered from unfair practices by student loan servicers and taken other actions to protect consumers.
“The CFPB has power to protect consumers through enforcement actions like fines and lawsuits,” said Jay Fleischman, a student loan lawyer and consumer advocate. “Since the Trump administration took over, and more specifically, since Mick Mulvaney has been in charge of the CFPB, actions like the Navient lawsuit have pretty much ground to a halt, leaving consumers exposed to abuses by servicers.”
Not everyone has been happy with the CFPB, however. Efforts to reduce the power of the CFPB have been underway since it was formed, and Mulvaney, a former Republican congressman representing South Carolina, has been one of its biggest detractors.
“It turns up being a joke, and that’s what the CFPB really has been, in a sick, sad kind of way,” Mulvaney told the Credit Union Times in 2014.
Texas congressman Jeb Hensarling, the Republican chairman of the House Financial Services committee, wrote a February 2017 op-ed in The Wall Street Journal, in which he called the CFPB unconstitutional: “The CFPB has eroded freedom, trampled due process and killed jobs. It must go.”
How you can protect yourself as a consumer
Despite the disdain some policymakers have for the CFPB, consumer advocates like Peterson and Fleischman insist that the agency had done a lot of good, putting the needs of citizens ahead of the concerns of the financial industry.
“The [Trump] administration has seized control of an independent consumer watchdog and is strangling one of the only agencies in Washington dedicated to looking out for the rights of ordinary Americans,” Peterson continued in the press release.
So, what can you do if you’re unsure of the protections available to you?
Fleischman said that it’s still possible to file complaints with various government agencies, including the Department of Education and the CFPB. However, he conceded that with the contraction of offices designed to protect students, such a move might be inadequate.
“In addition to filing a complaint, consider sitting down with an attorney,” he said. “Many consumer advocate attorneys work on a contingency basis, so it won’t cost you anything to consult one.”
Fleischman recommended visiting the website for the National Association of Consumer Advocates for information on your rights and how to find a student loan lawyer that might be able to help you.
It’s also possible to influence future policy, and protect the CFPB and the office of ombudsman, by being politically active. Pay attention to higher education bills in Congress, and contact state and federal representatives with your concerns.
And, of course, vote for legislators that will implement policies designed to protect consumers (and encourage your friends to do the same).
“The student loan ombudsman has always been tremendously helpful,” said Fleischman, adding that as the government gives up its role in consumer protection, it’s up to private attorneys and consumer advocates to take on a heavier burden. “That’s what we’re here for. We’re the protectors. And now we’re some of the only ones left.”
This post originally appeared on StudentLoanHero.com, a subsidiary of LendingTree.
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