WASHINGTON, D.C. – Mick Mulvaney, the unlawful Acting Director of the Consumer Financial Protection Bureau (CFPB), announced today that he is closing the Bureau’s Office of Students and folding it into the Office of Financial Education. The closure is the latest in a series of actions and proposals that threaten to undermine the consumer protections that have been put into place by the CFPB to address large-scale abuses within our financial system.
Whitney Barkley-Denney, senior policy counsel with the Center for Responsible Lending, issued the following statement:
The former director of the CFPB had good reason to create an Office of Students. Americans carry $1.4 trillion in student loan debt and the average student borrower leaves college owing nearly $30,000. One in four student borrowers is in trouble with their loans, indicating major dysfunction in our system and a national crisis.
Since its creation, the CFPB has worked to curb abuse, including suing the largest servicer for failing to effectively serve borrowers, successfully securing $480 million in relief for borrowers who attended the now-shuttered Corinthian Colleges, documenting widespread failures, monitoring and addressing servicing complaints, and working with other agencies, including the Department of Education, to develop best practices for servicers and share information so that borrowers are better protected.
The Office of Students also educates students, making student loans and college finances more transparent. Education, however, is not enough. Education alone cannot stop predatory behaviors on the part of for-profit schools and servicers, nor can it help hundreds of thousands of Americans in serious debt because of these practices.
For millions of people, our current system is obstructing the path to the American Dream once promised by the pursuit of a college education. Unmanageable student debt causes borrowers to delay or forego the purchase of homes and cars, and sometimes denies them the foundation they need to start a family. For people of color, who are disproportionately impacted by student loan debt, for-profit college abuses, and student loan servicing abuses, this broken promise means closing the racial wealth gap is that much more elusive.
The White House should immediately nominate a CFPB director who will refrain from destroying the programs that Mulvaney’s predecessor put into place, and who rather will build on the reforms that student borrowers and all Americans need for their lives to work.
Actions like this help explain why, according to a newly released poll of Marylanders by CRL, only 12% surveyed trust the federal government to have the backs of student loan borrowers. As it becomes increasingly clear that the CFPB and the U.S. Department of Education will not protect borrowers and their families, states must step up and take action.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Carol Hammerstein at email@example.com.