College Students Get a Lesson in Corruption
Making tuition loans to college students is a huge business. Some $1.5 trillion in loans are outstanding to student borrowers and some of these loans have been flagged for being abusive in terms of bad disclosure or aggressive collection practices from loan servicers and debt collectors.
College tuition debt now exceeds credit card debt. The average student loan debt for Class of 2017 graduates was $39,400, a 6% increase from 2017, according to Student Loan Hero.
This same site says 44 million Americans owe more than $1.48 trillion in student loan debt, which translates into over $620 billion more than the total U.S. credit card debt.
The job of overseeing and responding to complaints from students holding college loans in done by the Consumer Finance Protection Board’s (CFPB) Office for Students and Young Consumers. The CFPB, created in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, has been the target of the Trump administration since Trump took office.
Predatory lending is a huge, profitable business and under the Trump administration it will continue to victimize students and military who need to borrow to advance their careers.
“Since 2011, the CFPB has handled more than 60,000 student loan complaints and, through its investigations and enforcement actions, returned more than $750 million to aggrieved borrowers,” according to NPR. And part of this investigation and reporting process these pro-student borrower actions has been done by Seth Frotman, student loan ombudsman.
On Monday, Frotman resigned from the post he has held since 2011 citing the Trump administrations continued efforts to curtail reports about abusive lending practices from major financial lenders. About a year ago, the U.S. Department of Education said it would no longer share information with the CFPB about federal student loans, a move seen as greatly reducing the CFPB’s ability to investigate and bring charges against abusive lenders.
In his resignation letter, Frotman said the Trump administration was catering to financial industry lobbying and intentionally misleading student borrowers about excessive fees charged by lenders. He also said “the Bureau’s current leadership folded to political pressure … and failed borrowers who depend on independent oversight to halt bad practices.”
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