STATEMENT: Resignation of Top Student Loan Watchdog
August 28, 2018
WASHINGTON— Seth Frotman, the Student Loan Ombudsman at the Consumer FInancial Protection Bureau tasked with overseeing the student loan market, resigned this morning. In a scathing resignation letter to Acting Director Mick Mulvaney, Frotman states that the current administration has “has turned its back on young people and their financial futures,” and “abandoned the very consumers it is tasked by Congress with protecting.”
The letter goes on to detail ways the current leadership is “undercutting enforcement of the law…undermining the bureau’s independence…[and] shielding bad actors from scrutiny.”
Charley Olena, Advocacy Director for youth engagement organization New Era Colorado, issued the following statement:
“Seth Frotman’s leadership of the Office of Students and Young Consumers uncovered systematic misconduct, fraud and abuse within the student loan servicing industry, prompting lawsuits and calls for reform across the country. Frotman has been an unwavering champion for the rights of borrowers with student loan debt at the federal level. His departure, combined with his allegations of the Bureau’s reluctance to enforce our laws and hold these servicers accountable, is no less than disturbing.
“Our financial future is at risk. There are more than 761,000 borrowers with over $24 billion of student loan debt in Colorado. Yet instead of protecting their basic rights, Secretary of Education Betsy Devos and Acting Director Mick Mulvaney are leaving borrowers across the nation to the mercy of unscrupulous and unaccountable lenders and loan servicers—some of the most powerful financial corporations in the country.
“As the federal government continues to roll back even the most basic protections for borrowers with student loans, the need for states to step up and act has never been clearer. The tens of thousands of young Coloradans we work with every year consistently name student loan debt as one of the top areas they would like to see elected officials taking action. With protections crumbling at the federal level, Colorado’s leaders have an obligation to take action locally to defend borrowers with student loan debt.
“Attorney General Cynthia Coffman has consistently made it clear that Colorado has an obligation to step up and protect borrowers with student loan debt where the federal government has failed to do so. Earlier this year, she co-authored a letter to Secretary of Education Betsy DeVos pushing back against the federal government’s attempted pre-emption of state laws regulating student loan servicers. Her office also supported HB18-1415, a bill that would have brought oversight of student loan servicers in line with other consumer loan providers in Colorado.
“We will fight to ensure that our leaders recognize the critical role they must play in protecting student borrowers and work with them to bring oversight of student loan servicers in line with other consumer servicers that operate in our state. We will continue to elevate the voices and stories of the Coloradans who have been taken advantage of by their student loan servicers across our state and in the halls of the capitol. We will not stop fighting until Colorado has strong protections in place for borrowers repaying student loans.”