On Monday, Aug. 27, the Consumer Financial Protection Bureau (CFPB), an organization that oversees consumer protection from predatory or harmful financial practices, lost a huge official from their team. While resignations from the Trump administration aren't necessarily shocking news anymore, Seth Frotman's resignation letter sets itself apart by totally slamming Donald Trump's administration for abandoning students on the issue of debt. Someone pour the tea.
Frotman, the CFPB's student loan ombudsman, reportedly quit on Aug. 27 in a letter that slammed the administration for failing student borrowers, according to a copy of the letter obtained by NPR. In the reported resignation letter, Frotman, who led the organization in protecting students from "predatory" lending practices, called out the administration for allegedly "turning their backs" on students and their financial security. Elite Daily reached out to the CFPB for comment on the reported resignation letter's veracity and the accusations it contains, but did not immediately hear back.
Frotman addressed the reported letter to CFPB director Mick Mulvaney, who he claimed has ignored the needs of students and their financial futures. "The current leadership of the Bureau has turned its back on young people and their financial futures," the reported letter read in part. It reportedly said,
Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting. Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America. As the Bureau official charged by Congress with overseeing the student loan market, I have seen how the current actions being taken by Bureau leadership are hurting families.
Student debt is one of the biggest challenges impacting young people today. According to Student Loan Hero, the average student loan debt for 2017 graduates was nearly $40,000, and Americans collectively owe up to $1.48 trillion in student loan debt. Those are truly some mind boggling statistics.
According to NPR, the CFPB has handled more than 60,000 complaints from student borrowers since 2011, and has returned $750 million to those unfairly treated. As the student loan ombudsman, Frotman's office was key in making sure students were receiving proper and just financial assistance by reviewing private lenders, debt collectors, etc. However, the Trump administration has allegedly pushed the CFPB's student loan office to the side over the past year, per Frotman, including when the U.S. Department of Education (DOE) announced they would stop sharing information with the CFPB about the oversight of private actors in federal student loan programs.
This isn't the first time students and graduates have had to deal with suspenseful decisions in regards to their financial security, however. In December 2017, Republicans unveiled a new tax reform bill, which caused a huge uproar among students and concerned citizens alike when early versions of the bill threatened tax-free tuition waivers and deductions, such as the student loan interest deduction and educational assistance deduction. However, thanks to the public's outcry, the final tax plan kept those waivers in place, so that was a brief moment of relief for students.
Despite that small victory, handling student debt is certainly not an easy road for graduates and current students. Especially since Secretary of Education Betsy DeVos wants to cut back student loan forgiveness programs for students who have been victims of fraudulent colleges. In July, news broke that the DOE was considering a proposal to tighten who could access debt relief after being defrauded by fake schools. At the time, DeVos issued a short statement in response to the education proposal, in which she insisted that the administration is dedicated to "protecting" students. “Our commitment and our focus has been and remains on protecting students from fraud," she said.
If Devos' proposal passes, it would go into effect by July 2019, and cut $13 billion in debt relief.
Start pinching those pennies people, because judging from Frotman's letter it looks like the Trump administration won't be helping us out with those loans anytime soon.