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>The resignation of the government's chief student loan watchdog could not have come at a worse time, and demonstrates the Trump administration's unwillingness to protect borrowers, advocates say. Seth Frotman, student loan ombudsman at the Consumer Financial Protection Bureau, resigned on Monday. In a letter to Mick Mulvaney, acting director of the CFPB, Frotman said he was leaving due to sweeping changes at the bureau, including the abandonment of enforcement and the protection of bad actors from scrutiny. "You have used the bureau to serve the wishes of the most powerful financial companies in America," Frotman wrote. The letter was obtained by NPR. The Consumer Financial Protection Bureau did not immediately respond to a request for comment. Frotman also could not be reached for comment. Frotman's absence underscores the current vulnerability of the country's millions of student loan borrowers, said Barmak Nassirian, director of federal relations at the American Association of State Colleges and Universities.<doc-sep>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>The federal government’s top official charged with protecting student loan borrowers announced his resignation on Monday, saying the Trump administration is making it impossible for him and other career staffers to do their job. Seth Frotman, the student loan ombudsman at the Consumer Financial Protection Bureau (CFPB), wrote in a scathing letter on Monday that bureau leadership “has turned its back on young people and their financial futures.” The letter, to acting CFPB Director Mick Mulvaney and other leadership, accuses the agency of siding with business interests over the consumers it is supposed to protect — including suppressing a report on how banks were ripping off students. “Under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting,” Frotman wrote. “Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.” The Associated Press was first to report Frotman’s resignation. NPR published the letter in full. The student loan ombudsman is supposed to make sure that students who have taken on debt to pay for their education aren’t being scammed or abused by banks or loan servicers. Frotman has served as the CFPB’s student loan ombudsman and assistant director for the Office of Students and Young Consumers since 2016. He’s been at the CFPB, the consumer protection agency established under the Dodd-Frank financial reform, since 2011. His resignation, which takes effect Friday, is the latest fallout as the Trump administration has reshaped the CFPB, trying to rein in the agency that is supposed to protect consumers against big financial institutions. “At every turn, your political appointees have silenced warnings” Frontman says the bureau under Mulvaney has undermined its protection for student loan recipients — so much so that he can’t do his job. The vast majority of student loans in the US are made by the federal government itself, through the Education Department, which lends directly to students. The department then contracts with private companies, called loan servicers, who manage the relationship with loan borrowers. The bureau accepted and publicized complaints about these servicers, essentially shining a spotlight on a problem the Education Department could address. But in September 2017, the Education Department said it would stop sharing student loan information with the CFPB, calling the regulator “overreaching and unaccountable.” By doing so, the Education Department “unilaterally shut the door to routine CFPB oversight of the largest student loan companies,” Frotman wrote. In his letter, Frotman outlined a number of areas where he said the administration had abandoned its law enforcement duties and folded to political pressures. The bureau has not been able to act independently under Mulvaney, Frotman said. When the Trump administration’s actions have opened student borrowers up to risks, he said, Mulvaney and other new leadership blocked efforts of career staffers to communicate to consumers and other departments about it, “At every turn, your political appointees have silenced warnings by those of us tasked with standing up for servicemembers and students,” he said. Frotman also accused Mulvaney of “shielding bad actors from scrutiny.” Last year, he wrote, new evidence came to light showing banks were ripping off students with legally dubious accounting fees, but bureau leaders suppressed a report on the matter. “American families need an independent Consumer Bureau to look out for them when lenders push products they know cannot be repaid, when banks and debt collectors conspire to abuse the courts and force American families out of their homes, and when student loan companies are allowed to drive millions of Americans to financial ruin with impunity,” he wrote. Under Mulvaney’s predecessor, Richard Cordray, Frotman and the office he heads coordinated a government-wide effort to reform the student loan market and heavily influenced law enforcement and oversight work in the space. The CFPB’s student loan office has returned $750 million to harmed borrowers since it was created. But since Mulvaney took over, career staffers have found it difficult to do their work. Randi Weingarten, president of the American Federation of Teachers, in a statement reacting to Frotman’s resignation said that while the union commends his decision to step down, “we mourn the attacks on the CFPB and an end to the politicization of this vital agency.” She continued, “The CFPB must return to its historic mission to protect the powerless, rather than shielding the bad actors preying on them.” Mulvaney is on quite a tear over at the CFPB Since becoming the bureau’s acting director in November, Mulvaney, who is also director of the Office of Management and Budget, has undertaken multiple measures to scale back the CFPB and, his detractors say, undermine its mission. He has reportedly scaled back an investigation into the Equifax data breach, relaxed restrictions on often predatory payday lenders, and recommended Congress pursue sweeping changes to the CFPB’s powers. He disbanded all of the bureau’s advisory boards and councils and even pushed to change the agency’s acronym to the BCFP. Mulvaney, who while in Congress in 2014 called the CFPB a “sick, sad” joke, has often argued he’s just sticking to the rules, saying he’ll do what the law says he has to, but no more. Mulvaney’s sticking-to-the-statute line has also resulted in the bureau rolling back supervision of predatory payday lenders for targeting active military members as is mandated under the Military Lending Act. Frotman’s resignation suggests Mulvaney is siding with financial industry interests over yet another vulnerable group: students saddled with enormous amounts of debt. It also signals where the CFPB might be headed on Navient, one of the country’s largest student lenders. The bureau, headed by Frotman’s office, is currently suing the company. As the AP reports, the Navient lawsuit has been bogged down by bureaucratic wrangling, as Education Secretary Betsy DeVos has been unwilling to help the CFPB with its case. The CFPB in January 2017 sued Navient, formerly part of Sallie Mae, saying it had illegally cheated borrowers out of repayment rights. The bureau has accused the Education Department, under DeVos, of refusing to authorize Navient to turn over documents it needs to show the company’s misbehavior and the harms it caused.<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.