WASHINGTON–The Consumer Federation of America is blasting a decision by Mick Mulvaney, acting director of the Bureau of Consumer Financial Protection, to shut down its Office for Students and Young Consumers, noting Americans’ student loan debt now tops $1.5 trillion.
“The Office for Students is the only unit in the federal government solely focused on protecting student loan borrowers and young adults from predatory actors in the financial sector,” the CFA said.
Since the CFPB opened its doors, the work of the Office for Students and Young Consumers has helped to return more than $750 million to student loan borrowers and halted predatory practices that harmed millions in pursuit of the American Dream, the consumer group added.
“Shuttering the CFPB’s student lending office is an appalling step in a longer march toward the elimination of meaningful American consumer protection law,” said Christopher Peterson, financial services director at CFA, in a statement. “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 CFA said that over the past seven years of the Office’s existence, in addition to returning the $750 million to borrowers and helping to stem predatory practices, more than 60,000 borrowers were able to demand answers from student loan companies, and that a number of big companies were held liable for their practices, especially at for-profit colleges.
‘Driving Borrowers into Default’
“The Office exposed how student loan companies were driving borrowers into default when their cosigner died or filed bankruptcy, even when borrowers had been paying their bills on time each month,” the CFA said. “It also showed how credit card companies and banks continue to push students into high-fee cards and accounts and pushed for strong new rules to reign in high-fee providers The Office exposed how federal debt collection contractors raked in billions of dollars of taxpayer money, while setting up the most vulnerable student loan borrowers to fail.”
According to the CFA, more than 11 million Americans are past due or in default on a student loan, despite the availability of income-driven repayment options for the vast majority of borrowers.
The CFA charged that “as student loan borrowers suffer widespread abuses at the hands of a runaway student loan industry, the Trump Administration has taken a series of aggressive actions to pull back consumer protections, obstruct independent oversight, and ensure that the largest student loan companies are never held to account for predatory practices.”