Trump Administration’s Selection of Industry Insider for Nation’s Student Loan Watchdog Heightens Urgency to Pass AB 376 to Protect California Student Loan Borrowers
Recent Revolving-Door Hire is Further Proof Washington is Failing to Stand up for Borrowers
The Trump Administration’s appointment on Friday of a student loan industry executive to serve as the nation’s top student loan watchdog is outrageous and unacceptable. California’s 3.7 million student loan borrowers, of whom over half a million are behind on their loans, are facing a student debt crisis owing $141 billion collectively. Yet, in Washington, the Trump Administration has taken the clearest step yet to put the interests of the student loan industry over the needs of borrowers.
California must quickly pass AB 376, the California Student Borrower Bill of Rights, to create a Student Borrower Advocate for Californians and give individual borrowers new tools to hold big student loan companies accountable for their abuses.
Leaders and advocates for protecting student borrowers in California and across the nation are condemning the Bureau’s appointment and urging state’s to take action. California is positioned to pave the way in the fight to protect borrowers: Natalia Abrams, Executive Director, Executive Director of Student Debt Crisis:
"For years, we heard alarming student loan complaints from borrowers across the country. We trusted the Consumer Financial Protection Bureau to hold these companies accountable. Now, with a former student loan company executive leading the bureau, the federal watchdog cannot be trusted to protect borrowers. California lawmakers must step in to defend people from unacceptable industry abuse by passing the Student Borrower Bill of Rights, AB-376.”Seth Frotman, Student Borrower Protection Center Executive Director and former CFPB student loan ombudsman:
It is outrageous, though not surprising, that an executive from a student loan company that has cheated students and taxpayers is now in charge of protecting borrowers’ rights. This is an insult to California’s 3.7 million borrowers who deserve an advocate in their corner. California leaders must act to hold industry accountable and to stand up for borrowers. Arnold Sowell, Executive Director NextGen California:
Student loans have ensnared millions of Americans in debt and predatory student loan servicing practices are to blame. By empowering the head of a student loan company to oversee student loan practices this administration has chosen once again to prioritize corporations over people. If ever there was an opportunity for California leadership to stand up and protect borrowers, the time is now. California must pass the Student Borrower Bill of Rights - AB 376. Kristin McGuire, Western Regional Director for Young Invincibles:
“With the appointment of Robert G. Cameron, it’s as clear as ever that the Trump Administration cares more about protecting predatory schools and lenders than they do defending the nation’s borrowers. California alone faces more than $141 billion in debt, and too often borrowers are subject to misleading information and difficult-to-navigate repayment plans by lenders who don’t have their best interests at heart. Our leaders in Sacramento must do what Washington won’t: Ensure that borrowers have an advocate looking out for them by passing the California Student Borrower Bill of Rights.”Suzanne Martindale, Senior Policy Counsel & Western States Legislative Manager, Consumer Reports:
"It is troubling that the CFPB shows little to no interest in protecting student borrowers, especially when so many are struggling unnecessarily because of loan servicing failures. California must lead the nation forward to fix the student debt crisis by promptly passing AB 376." The California Student Borrower Bill of Rights The Student Borrower Bill of Rights was authored by Assemblymember Mark Stone (Santa Cruz), and is co-sponsored by the Student Borrower Protection Center (protectborrowers.org), Consumer Reports Advocacy (advocacy.consumerreports.org), NextGen California (ca.nextgenamerica.org), Student Debt Crisis (borrowersbills.org), and Young Invincibles (younginvincibles.org). Earlier this year, the legislation’s co-sponsors joined with dozens of other organizations representing students, workers, consumers, older Americans, communities of color, and veterans to launch the Campaign for California Borrowers Rights (www.californiaborrowers.org) to advocate in support of this legislation and to fight to end the student debt crisis in California. ### Washington Fails to Stand Up for Student Loan Borrowers; California Must Act to Protect its Citizens Under current leadership, the federal agency charged with protecting consumers—the Consumer Financial Protection Bureau—has continually failed to stand up for student loan borrowers. The Student Borrower Protection Center and a coalition of consumer advocates recently highlighted those shortcomings which include: Filling Nation’s Top Student Loan Watchdog Position with Industry Insider Last March, Director Kraninger testified before the House Financial Services Committee that she was working to “quickly” fill the Bureau’s student loan ombudsman position. After the post was vacant for nearly a year, Robert G. Cameron, a former top official at the Pennsylvania Higher Education Assistance Agency (PHEAA), was appointed as the agency's student loan ombudsman. Failing to Deliver Annual Report on Borrower Complaints The Bureau is required by law to issue a comprehensive annual report describing complaints from student loan borrowers and provide policy recommendations to Congress. In the past, this report helped uncover illegal practices and highlight challenges facing all types of borrowers, including public servants, servicemembers, older Americans, and even families saddled with student debt after the death of a loved one. Since opening its doors, CFPB has received more than 50,000 complaints from student loan borrowers, including nearly 7,000 additional complaints while the ombudsman role has been vacant. The report is now over 300 days overdue to Congress. Refusing to Stand Up to Betsy DeVos’s Obstruction; Leaving a Trillion Dollar Market Unchecked In 2017, U.S. Secretary of Education Betsy DeVos instructed the largest student loan companies to stop sharing information with federal and state law enforcement officials, which obstructed their ability to conduct critical oversight. This move was denounced by lawmakers and dismissed by judges. State law enforcement agencies have since stood up to Betsy DeVos to demand the information needed to do their jobs, but the Bureau remains unwilling. This lack of oversight by the Bureau leaves a trillion dollar market unchecked and bears an alarming similarity to the lax oversight of the mortgage market leading up to the financial crisis. Turning Its Back on Teachers, Nurses, and other Public Servants’ Right to Loan Forgiveness The Bureau is failing to police widespread breakdowns and illegal servicing practices that have led to public servants being denied their right to Public Service Loan Forgiveness. Teachers, nurses, firefighters, police officers, and others applying for forgiveness have been denied at a rate of 99 percent. As Director Kraninger made clear to Congress, the Bureau has abandoned this work despite serious concerns raised by the nation’s largest labor unions, which represent more than 21 million workers. Failing to Enforce Laws to Protect Student Loan Borrowers of Color from Discrimination The Bureau announced in 2017 that it would prioritize ensuring that the largest student loan companies are following the nation’s fair lending laws. In response to questions from Congress, Director Kraninger admitted this work was no longer occurring. A wide range of civil rights organizations have called on the Bureau to prioritize this critical oversight, yet Director Kraninger continues to appease Betsy DeVos rather than protect student loan borrowers from discrimination as they navigate the student loan process. Weakening the Office for Students and Young Consumers Despite troubling delinquency rates across a range of financial products for millennials from auto loans, to credit cards, to student loans, public reports have revealed that the Bureau’s Office for Students and Young Consumers has been significantly weakened. In addition to the failure to appoint an ombudsman, news reports show that staffing has been reduced, resources decreased, and the office has been downgraded within the agency to a role with less authority, leaving students more vulnerable to predatory practices. Failing to Establish Legally Mandated Partnership with Department of Education The Dodd-Frank Act requires the Bureau to have an agreement with the Department of Education in order to share critical information about student loans, including consumer complaint data. Last year, Department of Education official Kathleen Smith, now a student loan industry lobbyist, rescinded this agreement. Director Kraninger committed to Congress to reestablish the partnership, as required by law, but today the Bureau has still failed to enter into an agreement with the Department of Education. ### ### The Student Borrower Protection Center is a nonprofit organization solely focused on alleviating the burden of student debt for millions of Americans. SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students. Led by the team of former federal regulators that directed oversight of the student loan market at the Consumer Financial Protection Bureau, SBPC exposes harmful and illegal practices in the student loan industry, drives impact litigation, advocates on behalf of student loan borrowers in Washington and in state capitals, and promotes progressive policy change. SBPC accomplishes these goals by partnering with leaders at all levels of government and throughout the nonprofit sector. Founded in 2009, Young Invincibles (YI) is a national nonprofit, non-partisan advocacy and research organization working with and for young adults to address the generation’s most pressing economic challenges by amplifying the voices of young adults in the political process. With a focus on higher education, health care, workforce development, and civic engagement, our work is guided by the belief that every young person - regardless of race, gender, socioeconomic status, or any other factor - deserves a fair chance to achieve their goals and reach financial stability. Student Debt Crisis is a non-profit (501c4) organization dedicated to fundamentally reforming student debt and higher education loan policies. Student Debt Crisis (SDC) takes a personal approach to member needs—working directly with borrowers to understand their challenges and fears, repayment obstacles and frustrations. SDC tackles the challenges of loan refinancing and consumer protection policies with media and legislators, as well as educating borrowers and higher education experts with lectures, webinars and special events. Consumer Reports is an expert, independent, non-profit organization whose mission is to work for a fair, just, and safe marketplace for all consumers and to empower consumers to protect themselves. Consumer Reports works for pro-consumer policies in the areas of financial services, as well as telecommunications, health care, food and product safety, energy, telecommunications, privacy and data security, and competition and consumer choice, among other issues, in Washington, DC, in the states, and in the marketplace. Consumer Reports is the world’s largest independent product-testing organization, using its dozens of labs, auto test center, and survey research department to rate thousands of products and services annually. Founded in 1936, Consumer Reports has over 6 million subscribers to its magazine, website, and other publications.