Student loan borrowers, already struggling to deal with big dollars in debt, have yet another reason to be nervous. The top federal consumer watchdog for student loans is resigning effective Sept. 1. "The American dream is under siege," wrote Seth Frotman, assistant director and student loan ombudsman for the Consumer Financial Protection Bureau, in his resignation letter. Frotman, the latest high-level departure from the CFPB, said borrowers are trapped in a broken student loan system but the administration is protecting lenders and big business. As part of his heated comments, Frotman said new evidence has come to light showing that the nation's largest banks were "ripping off students on campuses across the country by saddling them with legally dubious account fees." But he charged that the bureau leadership has suppressed publication of a report on the problem relating to the bank fees. "You choose to leave students vulnerable to predatory practices and deny any responsibility to bring this information to light," Frotman wrote in his resignation letter. Frotman had highly critical remarks when it came to the consumer bureau's acting director Mick Mulvaney, claiming that the bureau's new political leadership has "repeatedly undercut and undermined" staff working to assist student loan borrowers who may have been harmed by bad actors. "After 10 months of your leadership, it has become clear that consumers no longer have a strong, independent Consumer Bureau on their side," Frotman wrote in a letter dated Aug. 27. The consumer bureau oversees the $1.5 trillion student loan market under the Dodd-Frank Act. Read more: Students aren't the only ones crushed by debt Student loan forgiveness rules to get tougher Behind on college loans? Consider these options This scam is targeting college students Advocates for student borrowers called Frotman's resignation "deeply troubling." In recent years, the federal consumer watchdog has been known to take on predatory lending practices, bad loan servicing practices and the nation's largest for-profit colleges, including ITT Tech, Corinthian Colleges and Bridgepoint Education. More than 60,000 student loan borrowers have submitted complaints or questions since 2012 to the CFPB, many times leading to resolutions that involved thousands of dollars back to individuals. Persis Yu, staff attorney at the National Consumer Law Center and director of NCLC’s Student Loan Borrower Assistance Project, said borrowers rely on the bureau to "ensure that they are not being ripped off and abused by their lender, servicer, or debt collector." "Student loan borrowers need a watchdog that will listen to the evidence and put borrowers’ interests above big business," Yu said in a statement. Yu said via email that the bureau has sent a "strong signal" that it would be less likely to protect student borrowers when it reorganized operations and tucked the Office of Students and Young Consumers into the more general Office of Financial Education. "The risk to borrowers is that known abusive and illegal practices will continue unchecked, and that even when the CFPB has taken action, that the Bureau will not actively pursue full relief for the borrowers who were harmed," Yu told me. "Borrowers need to know that someone is looking out for their interests and not just big business," Yu said. She noted that the bureau had previously uncovered systemic abuses in student loan servicing, prompting important reforms to the industry. It also uncovered problems with the U.S. Department of Education’s implementation of income-driven repayment plans. The watchdog bureau's work eventually lead to a lawsuit against student loan servicer Navient for practices that caused borrowers to pay thousands of additional dollars on their federal student loans and added years to their repayment, she said. “For years, the National Consumer Law Center has documented servicer and debt collector abuses that can cost borrowers thousands of dollars and years of repayment," Yu said. Christopher Peterson, director of financial services at the Consumer Federation of America, said in a statement that Frotman’s resignation comes on the heels of Mulvaney’s decision to close the CFPB’s Office for Students and Young Consumers, the only federal entity dedicated entirely to protecting student borrowers and young adults from abusive financial practices. "The truth is that the President’s consumer protection agenda is a dumpster fire,” Peterson said in a statement. “The 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.” Under Frotman’s leadership, advocates noted that the CFPB helped to return more than $750 million to student borrowers and end a variety of financial schemes that preyed on young people. "The loss of a strong advocate for borrowers increases the risk to borrowers," said Mark Kantrowitz, publisher and vice president of research for Savingforcollege.com. Kantrowitz said the Trump Administration has taken a several steps that student advocates have characterized as anti-borrower. Among such efforts, the U.S. Department of Education has stopped sharing borrower complaints with the CFPB. The U.S. Department of Education also wants to make it tougher to get federal college loans forgiven using the argument that the school cheated you out of a good education by misleading you about job prospects or engaging in fraud. The Trump Administration also has proposed repealing the Public Service Loan Forgiveness program and ending Subsidized Federal Stafford Loans and the Grad PLUS Loan Program. Contact Susan Tompor: stompor@freepress.com or 313-222-8876. Follow Susan on Twitter @Tompor.<doc-sep>Among his charges is that the bureau squashed publication of data showing banks are ripping off college students with “legally dubious” debit card fees. People familiar with the situation said that staff had discovered abuses with debit cards, which they said became vehicles for abuse after crackdowns on credit card rules. But the law only mandates that information on credit cards be published, and Mulvaney would not let the report go beyond that.<doc-sep>A major student-loan watchdog is stepping down and criticizing the Trump administration’s handling of the nation’s student-loan problem. Seth Frotman, the student-loan ombudsman at the Consumer Financial Protection Bureau, sent his letter of resignation to acting CFPB director Mick Mulvaney on Monday. Frotman, who has worked at the CFPB for the past seven years, served as the head of the agency’s student loan office since 2015. Both the announcement of his resignation and the tenor of Frotman’s letter, in which he accused the CFPB’s current leadership of “hurting families,” have consumer advocates worried about the future for student loan borrowers. The departure also comes amid growing concern from borrower advocates over the way the Trump administration is approaching the country’s $1.5 trillion student-loan problem. Since its inception, the CFPB’s student-loan office was known for its aggressive approach to monitoring the student-loan market. But Frotman’s letter suggests that under Mulvaney’s leadership, those efforts have stalled. Frotman’s resignation comes just a few months after the CFPB reorganized its student loan office, shifting its focus from enforcement to financial literacy. “Unfortunately, under your leadership, the bureau has abandoned the very consumers it is tasked by Congress with protecting,” Frotman wrote in his letter to Mulvaney. “Instead, you have used the bureau to serve the wishes of the most powerful financial companies in America.” Struggling to pay student debt? Here's what you need to know. Frotman cites examples of what he alleges are efforts by political staff to undermine the bureau’s student-loan work, including suppressing a report prepared by career CFPB staff on “dubious” fees that banks charge college students and making it more difficult for CFPB staffers to help student-loan borrowers get money back when they’ve been victims of troubling practices, among other accusations. “It seems like folks are feeling like they can’t do their job,” said Persis Yu, the director of the Student Loan Borrower Assistance Project at the National Consumer Law Center. “That’s incredibly concerning, because their jobs are incredibly important to the people that I represent.” The CFPB press office declined to comment on personnel matters, but wrote in an email, “We hope that all of our departing employees find fulfillment in other pursuits and we thank them for their service.” Frotman has played a direct role in holding student-loan companies accountable, perhaps most notably by overseeing a CFPB lawsuit against student loan giant Navient, Yu said. But she also noted other, more subtle ways the agency helped student loan borrowers during Frotman’s tenure. They include producing research on how certain industry practices affect the most vulnerable student-loan borrowers and working on behalf of borrowers who lodge complaints against servicers. The agency has also secured more than $750 million in relief for student loan borrowers. “People can relate to the experience of making a payment and not having it go to the right place,” Yu said. “Those are the kinds of abuses and practices that the CFPB is looking out for and they’re ensuring get fixed.” Frotman’s resignation and the state of the agency’s student-loan office as portrayed in his letter has advocates worried that student-loan borrowers are becoming increasingly vulnerable to bad actors at an already precarious time. “Borrowers are on their own to figure out not just how to navigate the system, but what to do when the system is not working properly,” said Julie Margetta Morgan, a fellow at the Roosevelt Institute, a think tank focused on economic and social equality. Historically, the CFPB has been unafraid to point out and try to address flaws in the student-loan system even if it “put other agencies in a tough spot,” Margetta Morgan said. Given recent actions by other agencies in the student-loan space, that watchdog role is particularly important, advocates say. Earlier this month, Betsy DeVos’s Department of Education announced plans to revamp to Obama-era rules cracking down on for-profit colleges. In addition, DeVos issued a memo earlier this year aimed at shielding student loan companies from state laws. In this environment, a robust student-loan office at the CFPB with a strong leader, like Frotman, is particularly important, Yu said. “We need someone who will really stand up to servicers, who will demand information and who will push for accountability.”<doc-sep>The U.S. government official overseeing the protection of student loan recipients from predatory lending practices resigned at the Consumer Financial Protection Bureau (CFPB) and wrote a scathing letter addressed to Mick Mulvaney, the bureau’s acting director. As first reported by NPR, who obtained the letter, Seth Frotman asserted that Mulvaney’s leadership led the bureau to “[abandon] the very consumers it is tasked by Congress with protecting.” The CFPB under Mulvaney’s leadership, Frotman wrote, “has turned its back on young people and their financial futures.” The CFPB oversees financial practices that could potentially harm consumers. “We protect consumers from unfair, deceptive, or abusive practices and take action against companies that break the law,” the bureau’s website reads. Part of their protection oversight includes the $1.5 trillion student loan industry. Frotman’s loud resignation brings into question how seriously the government takes its responsibility to protect student borrowers. Frotman accused Mulvaney of using “the Bureau to serve the wishes of the most powerful financial companies in America.” Climbing out of debt In a recent survey by Student Loan Hero, 39 percent of millennials said too much debt is their No. 1 source of stress. The cost of getting a degree contributes a large part to that burden. From the time that millennials were born until the time they entered college, tuition increased by nearly 129% for private colleges and by over 213% for public colleges, when adjusted for inflation. Add that to the fact that, according to a new St. Louis Fed study, families of millennials were hit particularly hard by the Financial Crisis. (Single millennials aren’t doing much better.) “Wealth in 2016 of the median family headed by someone born in the 1980s remained 34 percent below the level we predicted based on the experience of earlier generations at the same age,” the Federal Reserve Bank of St. Louis stated. Story continues Predicted vs. Actual Median Net Worth, Family Heads Born 1960–1989. Federal Reserve Bank of St. Louis “Consider a typical 32-year-old family respondent in 2016 (born in 1984),” the study added. “This respondent’s family was 34 percent ($12,000) below the 32-year-old benchmark established by earlier generations.” This group is also holding more debt than any previous generations. And because the debt that millennial families hold is not attached to “assets that have appreciated rapidly during the last few years — such as stocks and real estate — they have received no leveraged wealth boost like that enjoyed by older cohorts.” Instead, this group is dealing with debts that accumulate high interest in a seemingly never-ending cycle of repayment, such as credit card debt, auto loans, and, yes, student loans. Seth Frotman. (Photo: CFPB) Losing an advocate Frotman had served at the CFPB since the agency was started seven years ago, and he held the position of ombudsman for the last three years. There, he was in charge of the Office for Students and Young Consumers, where he reviewed complaints from student borrowers about private lenders, loan servicers, and debt collectors. His departure comes after the relationship between the Trump administration and the CFPB has grown increasingly fraught. Last summer, the U.S. Department of Education announced it would no longer share information regarding the oversight of federal student loans with the CFPB, claiming the bureau was “overreaching and unaccountable.” “The Bureau’s current leadership folded to political pressure … and failed borrowers who depend on independent oversight to halt bad practices,” Frotman wrote of the decision. Follow Katie on Twitter. READ MORE: American women are facing ‘perfect storm’ of student debt<doc-sep>
The official said the administration has turned its back on students. The top federal official in charge of advocating for students dealing with student loan debt resigned Monday, reportedly accusing the Trump administration of abandoning protections for students. Seth Frotman is the Student Loan Ombudsman at the Consumer Financial Protection Bureau, an office that was created under Dodd-Frank. The office has handled almost 60,000 complaints about federal and private student loans since it was established in 2011, according to the 2017 annual report. National Public Radio and the Associated Press reported that Frotman called out the administration in his resignation letter, saying the Consumer Financial Protection Bureau has "turned its back on young people and their financial futures." "Unfortunately, under your leadership, the bureau has abandoned the very consumers it is tasked by Congress with protecting," Frotman wrote to the Office of Management and Budget's director Mick Mulvaney, according to NPR. "Instead, you have used the bureau to serve the wishes of the most powerful financial companies in America." Mulvaney announced earlier this year that the CFPB would close the student office and fold it into the bureau's financial education office, which led to scorn from consumer advocacy groups who said it could leave students without an advocate to protect them from issues with student loans. The Consumer Federation of America praised Frotman in a statement and said that the Trump administration is turning against protecting students rights. "The truth is that the president’s consumer protection agenda is a dumpster fire,” said Christopher Peterson, director of financial services at the Consumer Federation of America, in a statement. “The 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.” A spokesperson for CFPB said they do not comment on specific personnel matters but that they thank all department employees for their service.